Can Ride-Hailing Platforms be Immune to Dual-Fairness Concerns?

Abstract

The rapid development of ride-hailing platforms has a substantial impact on urban transportation ecosystems, which raises the issue of fairness concerns both vertically and horizontally. To investigate the effects of dual-fairness concerns on the ride-hailing platform, this article studies a taxi and ride-hailing system, which captures the vertical interactions between the ride-hailing platform and the ride-hailing driver with vertical fairness concern, and the horizontal competition between the ride-hailing driver and the taxi driver with horizontal fairness concern. Two incentive strategies (i.e., revenue and demand sharing strategy and ride-hailing fare subsidy strategy) for the ride-hailing platform are designed to relieve the negative impact of fairness concerns. Government’s regulation on taxi fare is also discussed in this article. By analyzing the dynamic game models that involve these stakeholders, we find that: 1) both the vertical and the horizontal fairness concerns will lower the utility of the ride-hailing platform; 2) the revenue and demand sharing strategy and the ride-hailing fare subsidy strategy can enhance the utility of the ride-hailing platform by relieving the negative impact of horizontal and vertical fairness concerns, respectively; and 3) with the government’s regulation on taxi fare, the negative impact of dual-fairness concerns can be relieved, and a higher social welfare can be achieved.