Booking versus search-based parking strategy: A game-theoretic methodology

Abstract

With the proliferation of digital platforms, the parking landscape has undergone a transformation, offering more than the traditional first-come-first-served parking option. The reservation-based parking mode has gained considerable popularity. Obviously, there is a competitive relationship between these two parking modes, posing a challenge for parking management authorities to achieve a balance. This study investigates pricing strategies in a duopoly parking market, comprising two distinct types of parking companies: search-based and reservation-based. We analyze three power structure models: (i) the Bertrand model, (ii) the Stackelberg model with the reservation-based parking company as a leader, and (iii) the Stackelberg model with the search-based parking company as a leader. Additionally, we develop a three-player game model that considers the involvement of the third-party investor in the reservation mode. Our findings indicate that the overall profit of the search-based parking company declines when the driver preference of reservation-based parking company increases. Moreover, reservation-based parking companies exhibit greater robustness compared to their search-based counterparts when facing penalty delays and fluctuations in waiting costs. Furthermore, a prudent evaluation is advised for the third-party investor when assessing investment opportunities, especially in scenarios where drivers demonstrate a pronounced preference for search-based parking companies.