Modeling a ride-sourcing market with a third-party platform integrator under batch matching mechanisms

Abstract

This paper develops a mathematical model to characterize a generalized ride-sourcing market with a third-party integrator and multiple competitive ride-sourcing platforms. Different from earlier works which normally assume instant matching strategies, our model can characterize the integrator’s and platforms’ decisions on choosing flexible matching strategies under batch matching mechanisms and their influences on the market equilibrium. Through theoretical analytics and numerical studies, this study reveals that the introduction of a third-party platform integrator is not always beneficial but may be detrimental to the system in certain situations. For example, an inefficient matching strategy chosen by the integrator may lead to a lose-lose situation where both the customers hailing rides through the integrator or the individual platforms experience longer waiting times. In addition, we show that a ride-sourcing platform with a high market share may refuse to join the integrator since the efficiency gains brought by the integrator do not outweigh the losses caused by its losing market share. The managerial insights obtained from this work can assist both the integrator and individual ride-sourcing platforms in developing more efficient operational strategies in terms of pricing and matching strategies.