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Published on: May 10, 2019
Ridesourcing platforms thrive on socio-economic inequality
Arjan de Ruijter1, Oded Cats2, Hans van Lint2
1Department of Transport & Planning, Delft University of Technology, Delft, 2628 CN, The Netherlands. a.j.f.deruijter@tudelft.nl.
Socio-economic inequality boosts ridesourcing market share by providing cheap labor and attracting high-paying, time-sensitive travelers. However, this inequality leads to minimal driver earnings and intense competition in urban areas.
Area of Science:
- Urban planning
- Transportation economics
- Computational social science
Background:
- Ridesourcing platforms appear to benefit from socio-economic inequality.
- Inequality may provide cheap labor and attract users willing to pay for convenience.
Purpose of the Study:
- To investigate the relationship between socio-economic inequality and ridesourcing market performance.
- To model supply-demand dynamics and user behavior in ridesourcing markets.
Main Methods:
- Agent-based simulation model developed to represent ridesourcing market interactions.
- Mode choice modeling with heterogeneous time perception and job seeker participation with heterogeneous reservation wages.
- Experiments conducted across a spectrum of inequality scenarios, including varied platform pricing.
Main Results:
- A strong, positive correlation was found between socio-economic inequality and ridesourcing market share.
- Cheap labor and time-sensitive users, amplified by network effects, drive this relationship.
- Driver earnings are significantly reduced in highly unequal urban areas, with high platform commissions and competition.
Conclusions:
- Socio-economic inequality is a key factor enabling ridesourcing market growth.
- The findings highlight potential negative consequences for drivers in unequal urban environments.
- Platform pricing strategies can influence market dynamics within different inequality contexts.
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