Designing Online Ride-hailing Platform In A Competitive Market

In recent years,more and more ride-haling platforms,which can both solve the problem of passengers' difficulty in traveling and the problem of private car drivers' empty driving at the same time,have come into people's sights.The emergence of car-hailing platforms compensate for peoples' travel demands that traditional travel models cannot meet.Moreover,it improves peoples' travel efficiency and service quality.It is expected that in the future,with the increase of the supply vehicles,service area and with the government policy guidance on different travel models,ride-hailing will gradually implement the conversion of other travel modes.In China,there are two local ride-hailing platforms which occupy nearly 70% percent ride-hailing market share.One is DiDi and the other is ShenZhou,both of which provide ride-hailing service but take completely different operating modes.Recently,ShenZhou released “U+ platform” strategy,opening traffic,technology and brand resources to the national private car owners and announced to charge them for free forever.DiDi takes C2 C mode(open-platform strategy)and ShenZhou takes B2C+C2C mode.This paper involves both positive cross-market network effect and negative network effect on the same side,which explores the platform's optimal pricing strategy and open-platform strategy with its competitor providing open-platform strategy.Through the analysis of passengers' waiting cost,this paper shows its impact on company's optimal pricing strategy,market share as well as its profit.Our research differs from the previous literatures in three aspects.First,none of the prior studies has considered the B2 C platforms' decisions on openness or not.Second,the present study takes both positive cross-market network effects and negative same-side network effects into consumers' utility function.Lastly,most of previous studies take empirical models.