A two-stage game-theoretical framework for Pricing & Management problem of shared mobility in a competitive market

Abstract

ABSTRACT With the global proliferation of shared mobility systems, the vehicle-sharing market has witnessed an influx of companies and investors, thereby intensifying competition and potentially leading to suboptimal decision-making. Consequently, there is a pressing need for a modelling framework that specifically addresses operational and strategic-level policy design for multiple vehicle-sharing companies in a competitive market. In this study, we develop a two-stage game-theoretical framework to simulate the competitive process between multiple vehicle-sharing companies, facilitating their business decisions regarding pricing and management (P&M) problem, where management mainly include service area design, vehicle deployment, redirecting, and rebalancing. In the first stage of the framework, two companies operating under the same shared mobility service form a strategic alliance to compete against another vehicle-sharing service. Subsequently, in the second stage, these two companies engage in competition to maximise their individual profits. Based on the factors such as generalised travel cost, average acceptance level and vehicle availability, the competition process of each stage is formulated as a generalised Nash equilibrium problem. A linearisation method is employed for solving the equilibrium solution. Finally, we apply our proposed models to various vehicle-sharing systems and application scenarios to demonstrate their applicability. The numerical results illustrate that our model assists companies in making rational management decisions amidst intense competition while also revealing market competition landscape of vehicle-sharing systems based on different travel distances in the shared mobility market.