Revisiting government regulations for ride-sourcing services under traffic congestion

Abstract

In this chapter, we use an equilibrium model to investigate the effects of various government regulations on ride-sourcing platforms. This extends the approach developed in Chapter 4 to enable investigation of the effects of government regulations on ride-sourcing platforms in a more general market scenario and in the presence of traffic congestion. We explore whether government regulations can induce a ride-sourcing platform to target a predetermined Pareto-efficient strategy, that is, a strategy on the Pareto-efficient frontier, along which a platform's profit cannot be increased without decreasing social welfare and vice versa. We thereby identify regulatory schemes that can motivate ride-sourcing platforms to choose Pareto-efficient operating strategies that create a win–win situation for platforms and society. We also examine how the level of traffic congestion influences the effects of various government regulations on ride-sourcing markets.