A theory of multihoming in rideshare competition

We examine competition among ridesharing platforms, where firms compete on both price and the wait time induced with idled drivers. We show that when consumers are the only agents who multihome, idleness is lower in duopoly than when consumers face a monopoly ridesharing platform. When drivers and c...

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Bibliographic Details
Published inJournal of economics & management strategy Vol. 28; no. 1; pp. 89 - 96
Main Authors Bryan, Kevin A., Gans, Joshua S.
Format Journal Article
LanguageEnglish
Published Cambridge Wiley Subscription Services, Inc 2019
Subjects
Car pools
Consumers
Density
Duopoly
Falls
Hotelling
idleness
Monopolies
platform
ridesharing
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Summary:We examine competition among ridesharing platforms, where firms compete on both price and the wait time induced with idled drivers. We show that when consumers are the only agents who multihome, idleness is lower in duopoly than when consumers face a monopoly ridesharing platform. When drivers and consumers multihome, idleness further falls to zero as it involves costs for each platform that are appropriated, in part, by their rival. Interestingly, socially superior outcomes may involve monopoly or competition under various multihoming regimes, depending on the density of the city, and the relative costs of idleness versus consumer disutility of waiting.
ISSN:1058-6407
1530-9134
DOI:10.1111/jems.12306