104 / 2024-04-20 11:21:15

Is the Air Regulation Policy Better for Ride-sharing Platforms and the Environment?

air regulation policy,ride-sharing platforms,ecological and economic benefits,carbon emissions,surplus

Recently, to improve carbon emissions reduction efficiency, a growing number of cities have implemented an air regulation policy that permits only electric vehicles (EVs), which include pure EVs, hybrid EVs, and more, to provide services on ride-sharing platforms. After the policy implementation, to continue offering services, original combustion vehicle (CV) drivers should incur a switching cost to use EVs. This paper analyzes how the policy affects a ride-sharing platform's price and wage decisions and whether the policy can simultaneously benefit the platform, customers, drivers, and the environment. The platform determines a price charged to customers and a wage paid to drivers, where customers are sensitive to the price and carbon emissions, and drivers are sensitive to the wage and switching cost (if any). After implementing the policy, we demonstrate that the platform will consistently offer drivers a higher wage while potentially lowering the price for customers. Despite possible decreases in price, the platform can still benefit from the policy, especially when the switching cost is low. Interestingly, the platform may remain profitable even if the policy results in all CV drivers choosing not to switch to EVs for offering services. Moreover, both customers and drivers can benefit from the policy if and only if the carbon reduction level of EVs is sufficiently high or the switching cost is sufficiently low or high. From an environmental standpoint, we show that implementing the policy will not necessarily result in lower carbon emissions unless the policy mandates the exclusive use of EVs with small enough carbon emissions. Finally, we conclude that when the switching cost is low and the carbon reduction level of EVs is high, implementing the policy can achieve a win-win-win-win outcome for the platform, customers, drivers, and the environment.