The impact of regulatory policy on the growth of ride-hailing platform: System dynamics perspective

Abstract

Regulatory policy is an important factor affecting the development of emerging ride-hailing platforms. However, there is little research exploring the impact of specific regulatory policies on platforms from the perspective of enterprise growth. Taking the Chinese ride-hailing platform (RHP) as an example, this study employs the system dynamics method to simulate and analyze the impact of restrictive policies on the model of vehicles and the qualification of drivers on the growth of RHP. Furthermore, it compares and evaluates the effects of different countermeasures taken by the platform in the face of policy uncertainty. Specifically, this study dynamically examines the growth of platforms under loose/strict policy and short/long term policy scenarios, and evaluates the coping strategy of self-built fleet adopted by platform. The results show that regulatory policy uncertainty brings great challenges to the overall development of the RHP. A Self-built fleet not only has the potential to improve RHP's ability to resist policy risks but also increases the platform's scale effect at both ends of supply and demand. It is worth noting that RHP should devise the most suitable strategy according to a comprehensive evaluation of the characteristics of the regulatory policies and the cost-effectiveness of the countermeasure. It also shows that the promotion and application of new energy vehicles and automated vehicles can bring good profit margins to RHP in the future. This study can help policymakers and managers better understand of the impact of regulatory policy on the growth of RHP and also provide a valuable reference for promoting the healthy and orderly development of ride-hailing market.