Shared parking for ride-sourcing platforms to reduce cruising traffic

Abstract

Ride-sourcing platforms create cruising traffic that exacerbates road congestion in large cities. This paper considers shared parking services for ride-sourcing vehicles to reduce the cruising traffic. We propose a novel business model that integrates shared parking services into the ride-sourcing platform. In the proposed business model, the platform (a) provides app-based interfaces to connect passengers, drivers and garage operators (private or commercial garages); (b) matches passengers to ride-sourcing vehicles for ride services; (c) matches idle vehicles to vacant parking spaces to reduce cruising traffic; and (d) determines the ride fare, driver payment, and parking rates to maximize its profit. We model the integrated platform as a three-sided market (i.e., passenger, driver and garage) that involves two matching processes: passenger-driver matching and driver-garage matching. An economic equilibrium model is proposed to characterize the incentives of passengers, drivers, garage operators, and the ride-sourcing platform. Optimal pricing strategies and the corresponding market outcomes are derived by solving the platform’s profit maximization problem. Based on the model, we show that integrated parking and ride-sourcing service can offer a Pareto improvement: in certain regime, it leads to higher passenger surplus, higher driver surplus, higher garage surplus, higher platform profit, and reduced cruising traffic. Further, we investigate the impacts of matching efficiency between drivers and garages on the proposed business model. We show that a higher matching efficiency always leads to increased platform profit and driver surplus, but it may not necessarily benefit passengers or garage operators in all cases. The above insights are validated through realistic numerical studies for San Francisco.