Dynamics of the Ride-Sourcing Market: A Coevolutionary Model of Competition between Two-Sided Mobility Platforms

Abstract

There is a fierce competition between two-sided mobility platforms (e.g., Uber and Lyft) fueled by massive subsidies, yet the underlying dynamics and interactions between the competing platforms are largely unknown. These platforms rely on the cross-side network effects to grow, they need to attract agents from both sides to kick-off: travellers are needed for drivers and drivers are needed for travellers. We use our coevolutionary model featured by the S-shaped learning curves to simulate the day-to-day dynamics of the ride-sourcing market at the microscopic level. We run three scenarios to illustrate the possible equilibria in the market. Our results underline how the correlation inside the ride-sourcing nest of the agents choice set significantly affects the platforms’ market shares. While late entry to the market decreases the chance of platform success and possibly results in “winner-takes-all”, heavy subsidies can keep the new platform in competition giving rise to “market sharing” regime.