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A theory of multihoming in rideshare competition
Author(s) -
Bryan Kevin A.,
Gans Joshua S.
Publication year - 2019
Publication title -
journal of economics and management strategy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.672
H-Index - 68
eISSN - 1530-9134
pISSN - 1058-6407
DOI - 10.1111/jems.12306
Subject(s) - multihoming , duopoly , monopoly , competition (biology) , microeconomics , face (sociological concept) , economics , industrial organization , business , computer science , the internet , cournot competition , sociology , ecology , social science , internet protocol , world wide web , biology
We examine competition among ridesharing platforms, where firms compete on both price and the wait time induced with idled drivers. We show that when consumers are the only agents who multihome, idleness is lower in duopoly than when consumers face a monopoly ridesharing platform. When drivers and consumers multihome, idleness further falls to zero as it involves costs for each platform that are appropriated, in part, by their rival. Interestingly, socially superior outcomes may involve monopoly or competition under various multihoming regimes, depending on the density of the city, and the relative costs of idleness versus consumer disutility of waiting.