Abstract
As in a typical two-sided market, the competition between transportation network companies (TNCs) can lead to market fragmentation and loss of matching efficiency between passengers and drivers, whereas a monopoly market may result in the dominant TNC abusing its market power. Therefore, whether to encourage or discourage competition between TNCs is a debatable question for cities. Prior studies explored this question mostly through mathematical equilibrium models, but few have comprehensively investigated it based on empirical analysis using real-world data. To fill this gap, this study proposes a framework to measure and analyze the competition between TNCs using the most accessible ride-hailing trip data. Specifically, using an interpretable machine learning model, we investigate how TNCs’ pricing and wage strategies influence their market shares and how competition intensity affects passenger cost and driver income. The results based on large-scale trip records from four TNCs in New York City show that the pricing strategy is more influential than the wage strategy on the market shares and competition intensity. Instead of the top TNC, it is the strategies of challenger TNCs (with sizeable but not the biggest market shares) that affect the competition more. Both the passenger cost and driver income can benefit from competition even after considering the potential loss of matching efficiency, while TNCs’ profits shrink with growing competition intensity. These findings suggest that cities should encourage competition between TNCs, yet within a limit. They add empirical evidence to prior studies and provide implications for regulating TNC competition.
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More From: Transportation Research Part A: Policy and Practice
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