Competition of ride-hailing platforms in the era of autonomous vehicles: Heavy or light asset?

Abstract

Business modes of ride-hailing services in the era of autonomous vehicles (AVs) could be vastly different from those of current human vehicles (HVs). In addition to the asset-heavy mode, wherein platforms both operate and have ownership of the AV assets, a new business mode known as the asset-light mode is emerging. The asset-light mode involves AV crowdsourcing, where private AV owners rent out their vehicles to platforms (Wang et al., 2021). This paper establishes a game-theoretical framework to model the competition between an asset-heavy platform and an asset-light platform. We first examine the mixed-strategy Nash equilibrium between the two AV ride-hailing services, considering that only the asset-light platform can crowdsource AVs, and then extend the model to allow both platforms to crowdsource AVs. Our analyses demonstrate that, in scenarios with insufficient AV supply, once the number of private AVs exceeds a small threshold, at least one of the platforms will crowdsource AVs, even though they cannot derive economic benefits. As the private AV market grows, the asset-light platform becomes more profitable. We then use numerical results to study the impact of price regulations on market participants and find that when urban planners aim to enhance social surplus, it is best not to regulate maximum trip fare, minimum rental payment, or maximum rental payment. These insights offer guidance for AV ride-hailing service providers and government regulators in the future era of AV commercialization.