Nash-stackelberg game perspective on pricing strategies for ride-hailing and aggregation platforms under bundle mode

Abstract

The growing popularity of aggregation platforms has attracted widespread attention in the ride-hailing market in recent years. In order to obtain additional orders by charging commissions and slotting fees, many ride-hailing platforms choose to bundle with aggregation platforms. Unlike traditional reseller electronic channels, the bundle channels may affect pricing of platforms, service levels of drivers, market demands and they may further impact on profits. These different attitudes raise an interesting and key question about the influence of bundle channels in ride-hailing platforms. In this paper, we propose an analytical framework for pricing strategies of ride-hailing and aggregation platforms under bundle mode and analyze their pricing process from the perspective of Nash and Stackelberg games, where the platforms serve as leaders to determine optimal prices through Nash equilibrium and the drivers serve as followers to provide optimal service levels. Through sensitivity analysis of service levels and costs, we capture the distribution trends of profits between the platforms. Based on some numerical examples and results analysis, some interesting managerial insights on pricing of ride-hailing and aggregation platforms are gained.