Spatio-temporal pricing for ridesharing platforms
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Abstract: Ridesharing platforms match drivers and riders to trips, using dynamic prices to balance supply and demand. A challenge is to set prices that are appropriately smooth in space and time, so that drivers with the flexibility to decide how to work will nevertheless choose to accept their dispatched trips, rather than drive to another area or wait for higher prices or a better trip. In this work, we propose a complete information model that is simple yet rich enough to incorporate spatial imbalance and temporal variations in supply and demand -- conditions that lead to market failures in today's platforms. We introduce the Spatio-Temporal Pricing (STP) mechanism. The mechanism is incentive-aligned, in that it is a subgame-perfect equilibrium for drivers to always accept their trip dispatches. From any history onward, the equilibrium outcome of the STP mechanism is welfare-optimal, envy-free, individually rational, budget balanced, and core-selecting. We also prove the impossibility of achieving the same economic properties in a dominant-strategy equilibrium. Simulation results show that the STP mechanism can achieve substantially improved social welfare and earning equity than a myopic mechanism.
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Cited in
(12)- Ride solo or pool: designing price-service menus for a ride-sharing platform
- Spatial pricing in ride-sharing networks
- Graph-Based Equilibrium Metrics for Dynamic Supply–Demand Systems With Applications to Ride-sourcing Platforms
- Dynamic pricing and matching in ride‐hailing platforms
- Budget-balanced and strategy-proof auctions for ridesharing
- Fly with social platform? Two-sided platform cooperation and pricing strategy considering same-side crowding out
- Price cycles in ridesharing platforms
- Dynamic pricing provides robust equilibria in stochastic ridesharing networks
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- Optimizing strategic and operational decisions of car sharing systems under demand uncertainty and substitution
- Truthful online double auctions for on-demand integrated ride-sourcing platforms
- Dynamic pricing of ride-hailing platforms considering service quality and supply capacity under demand fluctuation
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