Chapter 9 - Third-party platform integration in ride-sourcing markets

Abstract

This chapter investigates the novel business model termed third-party platform integration, in which the ride services offered by multiple independent ride-sourcing platforms are made available to passengers via third-party integrators. Passengers can request ride services via these integrators and then receive services from any one of the ride-sourcing platforms linked to the integrators. This business model has the potential to alleviate market fragmentation costs resulting from demand splitting between multiple platforms. We devise a mathematical model to depict a ride-sourcing market with multiple competing platforms and compare the system performance measures of two market scenarios—i.e., markets with and without platform integration—at the Nash equilibrium and at the social optimum. We find that compared with a market without platform integration, a market with platform integration generally achieves greater social welfare. This is because platform integration generates a thicker market and reduces matching frictions, while also maintaining the competition between ride-sourcing platforms, such that they continue to independently determine their fares and drivers' incomes.