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Price Cycles in Ridesharing Platforms

Yu, Chenkai and Ma, Hongyao and Wierman, Adam (2022) Price Cycles in Ridesharing Platforms. . (Unpublished)

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In ridesharing platforms such as Uber and Lyft, it is observed that drivers sometimes collaboratively go offline when the price is low, and then return after the price has risen due to the perceived lack of supply. This collective strategy leads to cyclic fluctuations in prices and available drivers, resulting in poor reliability and social welfare. We study a continuous time, non-atomic model and prove that such online/offline strategies may form a Nash equilibrium among drivers, but lead to a lower total driver payoff if the market is sufficiently dense. Further, we show how to set price floors that effectively mitigate the emergence and impact of price cycles.

Item Type:Report or Paper (Discussion Paper)
Related URLs:
URLURL TypeDescription Paper
Wierman, Adam0000-0002-5923-0199
Record Number:CaltechAUTHORS:20220304-172351810
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Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:113736
Deposited By: George Porter
Deposited On:07 Mar 2022 19:37
Last Modified:07 Mar 2022 19:37

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