Surge pricing and labor supply in the ride-sourcing market

By Liteng Zha, Yafeng Yin, Yuchuan Du. Transportation Research Part B: Methodological, 2018

215 citations recorded by the source corpus.

This study proposes equilibrium models under different behavioral assumptions of labor supply in a ride-sourcing market and then investigates the performance of surge pricing. A time-expanded network is first proposed to delineate possible work schedules of drivers. Based on the proposed network, we provide formulations and algorithms for both neoclassical and income-targeting hypotheses to characterize the labor supply of ride-sourcing drivers, i.e., their choices of work hours. We then investigate the impact of surge pricing using a bi-level programming framework, with the lower-level problem capturing the equilibrium work hour choices while the upper-level one representing revenue-maximizing surge pricing. Compared to static pricing, the platform and drivers are found to generally enjoy higher revenue while customers may be made worse off during highly surged periods. Lastly, a simple regulation scheme to reduce market power is discussed.

Subfields: Automotive Engineering, Transportation

View Paper: https://www.semanticscholar.org/paper/65bf9148ebe417fbb5407b07335a00ca3909baf6

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Automotive Engineering

1. M. Ramezani
2. Mehdi Nourinejad

In Transportation

1. M. Ramezani
2. Mehdi Nourinejad
3. Wei Liu
4. S. Waller

Citations in the corpus

• Ride-Sourcing modeling and pricing in non-equilibrium two-sided markets (2020, background): “Zha et al. (2017) formulate both strategies as an equilibrium model and investigate their properties.”
• Single-leader multi-follower games for the regulation of two-sided Mobility-as-a-Service markets (2021, background): “In terms of on-demand ridesharing system, Zha, Yin, and Du (2018) investigated the performance of surge pricing where the leader’s problem determines the prices and the followers’ problem represents drivers’ equilibrium in work hour choices.”