The Price of Fragmentation in Mobility-on-Demand Services

Abstract

Mobility-on-Demand platforms are a fast growing component of the urban transit ecosystem. Though a growing literature addresses the question of how to make individual MoD platforms more efficient, much less is known about the cost of market fragmentation, i.e., the impact on welfare due to splitting the demand between multiple independent platforms. Our work aims to quantify how much platform fragmentation degrades the efficiency of the system. In particular, we focus on a setting where demand is exogenously split between multiple platforms, and study the increase in the supply rebalancing cost incurred by each platform to meet this demand, vis-a-vis the cost incurred by a centralized platform serving the aggregate demand. We show under a large-market scaling, this Price-of-Fragmentation undergoes a phase transition, wherein, depending on the nature of the exogenous demand, the additional cost due to fragmentation either vanishes or grows unbounded. We provide conditions that characterize which regime applies to any given system, and discuss implications of this on how such platforms should be regulated.

A framework to integrate mode choice in the design of mobility-on-demand systems

“…Realistically, several MoD and taxi services co-exist and their behaviors are dependent on competitive factors. Competition between these services and the resulting market equilibrium , Qian and Ukkusuri 2017, Heilker and Sieg 2018 and their impact on operator efficiency (Séjourné et al 2018) have been studied independently. Integrating these competitive models in the proposed framework is a direction for future research.…”