Research on ride-hailing summarized by simple numbers

We recently have two papers on ride-hailing accepted:

• "What do walking and e-hailing bring to scale economies in on-demand mobility?", collaborated with Prof. Andres Fielbaum from University Sydney, and Prof. Javier Alonso-Mora from Delft University of Technology, will be published on Transportation Research Part B:Methodological.

• "The VCG pricing policy with unit reserve prices for ride-sourcing is 3/4-individual compatibility", collaborated with Prof. Ruijie Li and other colleagues from Southwester Jiaotong University, has been published on Transportation Part C: Emerging Technologies.

Interestingly, the main results of both papers can be summarized by simple numbers, regardless the heavy math behind.

In the TRB paper, we derived close-form expressions of degree of scale economies (DSE) in different ride-hailing service schemes, both at the system level and in the matching process. We showed that DSE in street-hailing matching (e.g., taxis) is insensitive to market scale and equals to 2, whereas DSE in e-hailing matching (e.g., Uber) is 1.5 when demand is low but approaches 1 as demand continues to grow.

In the TRC paper, we examine a VCG mechanism with a reserve price per unit distance, which is more practical for ride-hailing services. We showed that such a mechanism is only 3/4-individual compatibility: while riders would always truthfully report their valuations, drivers might have incentives to misreport and only underreport their valuations.