TRANSPORTATION NETWORK COMPANIES AND DRIVERS DILEMMA IN CHINA: AN EVOLUTIONARY GAME THEORETIC PERSPECTIVE

Abstract

The ridesourcing services market in China has recently experienced significant changes, which stem from its legalization and management policy. These changes impact multiple stakeholders of this market (e.g., drivers, passengers, government, competing services) and present them with new opportunities and challenges. This paper develops an evolutionary game model to analyse the Evolutionary Stable Strategy (ESS) between the Transportation Network Companies (TNCs) and drivers. The new model is explored and analysed with simulation experiments to observe the dynamic route of multiple stakeholders. The theoretical research and simulation results indicate that under the authorities’ control over the TNCs, when the net income under strict management is higher than that of the loose management for the TNCs, the final ESS is “Legal Operation, Strict Management”. When the net income under strict management is less than that of the loose management for the THCs, the strategy of “Illegal Operation, Loose Management” may gain popularity and continue to grow; in this case, the ESS may also not exist. The model indicates the strength of the government’s control plays a significant role in leading the achievement of “Legal Operation, Strict Management”. As a consequence, to achieve the perfect evolution of “Legal Operation, Strict Management”, it is necessary for the government to impose a greater penalty on illegal drivers and ensure appropriate compensation measures. The results of the study provide a useful reference for the sustainable development of the ridesourcing services market.