180 / 2024-04-22 19:36:34

Channel Choices of Ride-sourcing Platforms in a Third-party Integration Market

Channel choice; ride-sourcing platform; third-party integrator; game theory

The prosperity of the sharing economy has brought huge dividends to many ride-sourcing platforms, while it has also led to more cut-throat competition among them. Under competitive pressure, platform enterprises must quickly adjust their business strategies according to the decisions of competitors and passengers. In practice, due to the advantage of low maintenance costs and the large customer base, third-party integrators dominate the ride-sourcing market in terms of market share and online traffic. In ride-sourcing markets, platform enterprises can choose third-party integrators or establish their self-supporting platforms to provide services to passengers. This paper aims to explore the optimal pricing strategy of ride-sourcing platforms in the market with or without platform-integration. How will the business model transformation of ride-sourcing platforms to third-party integrators affect the bilateral user scale and platform revenue? This problem needs to be answered in detail by the theoretical circle. We develop a game-theoretic model to investigate the equilibrium channel choice and derive conditions under which each of the three channel structures (self-supporting channel, third-party integration channel, and dual channel) emerges in equilibrium. This study provides a new perspective for ride-hailing platform managers to understand and formulate distribution channel strategies in a third-party integrated market.