The cost of non-coordination in urban on-demand mobility

Abstract

AbstractOver the last 10 years, ride-hailing companies (such as Uber and Grab) have proliferated in cities around the world. While generally beneficial from an economic viewpoint, having a plurality of operators that serve a given demand for point-to-point trips might induce traffic inefficiencies due to the lack of coordination between operators when serving trips. In fact, the efficiency of vehicle fleet management depends, among other things, density of the demand in the city, and in this sense having multiple operators in the market can be seen as a disadvantage. There is thus a tension between having a plurality of operators in the market, and the overall traffic efficiency. To this date, there is no systematic analysis of this trade-off, which is fundamental to design the best future urban mobility landscape. In this paper, we present the first systematic, data-driven characterization of the cost of non-coordination in urban on-demand mobility markets by proposing a simple, yet realistic, model. This model uses trip density and average traffic speed in a city as its input, and provides an accurate estimate of the additional number of vehicles that should circulate due to the lack of coordination between operators—the cost of non-coordination. We plot such cost across different cities—Singapore, New York (limited to the borough of Manhattan in this work), San Francisco, Vienna and Curitiba—and show that due to non-coordination, each additional operator in the market can increase the total number of circulating vehicles by up to 67%. Our findings could support city policy makers to make data supported decisions when regulating urban on-demand mobility markets in their cities. At the same time, our results outline the need of a more proactive government participation and the need for new, innovative solutions that would enable a better coordination of on-demand mobility operators.