Abstract

Today, ride-hailing platform operations are popular. Facing pandemics (e.g., COVID-19) some customers feel unsafe for the ride-hailing service and possess a “safety risk-averse” (SRA) attitude. The proportion of this type of SRA customers is unfortunately unknown, which makes it difficult for the ride-hailing platform to decide its optimal service price. In this article, understanding that blockchain technology (BT) based systems can help improve market estimation for the proportion of SRA customers, we conduct a theoretical study to explore the impacts that the BT-based system can bring to the platform, customers, and drivers. We consider the case in which the platform is risk-averse (in profit) and serves a market with both SRA and non-SRA customers. We analytically prove that using BT, the optimal service price will be increased and BT is especially helpful for the case with a more risk-averse ride-hailing platform. However, whether it is more or less significant for the more risk-averse SRA customers depends on their degree of risk aversion. We uncover that when the use of BT is beneficial to the customers, it will also be beneficial to the drivers, and vice versa. We derive in closed-form the analytical conditions under which the use of BT can be beneficial to the ride-hailing platform, customers, and drivers (i.e., achieving “all-win”). When all-win cannot be achieved automatically, we explore how governments can provide sponsors to help. We further extend the analysis to consider the general case in which BT incurs both a fixed cost as well as a cost increasing in demand. We prove that the main conclusion remains robust. In addition, we reveal that the required amount of government sponsor to achieve all-win is the same between the two different costing models explored in this article.

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