Competition among ride-hailing firms should be good, offering more choices for customers. Having excessively many vehicles on ride-hailing can cause congestion in urban areas. How do cities manage these two factors?
A recent investigation that was co-authored with MIT researchers, working together with the Institute for Informatics and Telematics of the National Research Council of Italy, offers an analysis of how much ridership-sharing firms clog the streets, which allows researchers and policymakers to determine how many cars and businesses can be a part of an optimally-sized market within a specific metropolitan region.
“What this shows is that by not coordinating ride-hailing companies, we are creating a huge amount of additional traffic,” says Carlo Ratti, a professor at MIT’s Department of Urban Studies and Planning (DUSP) and co-author of a new study outlining the findings of the study. “If cities were to use a platform to coordinate ride-hailing, we could reduce overall congestion and traffic in cities all over the world.”
This research paper, “The cost of non-cordination in urban on-demand mobility,” was published in Nature Scientific Reports.
These authors include Daniel Kondor, a researcher at the Singapore-MIT Alliance Research and technology (SMART); Iva Bojic, who is a researcher for SMART; Giovanni Resta, a researcher at the Institute for Informatics and Telematics at the National Research Council of Italy; Fabio Duarte, a lecturer at DUSP and the chief research scientist at the MIT’s Senseable City Lab; Paolo Santi who is the principal researcher in the Senseable City Lab and research director at the Institute for Informatics and Telematics of the National Research Council of Italy as well as Ratti She is an associate professor of urban technology and planning at DUSP and Director of the Senseable City Lab.
Cost estimation by traffic
To conduct the study, researchers collected anonymized taxi information to determine the locations where people seek rides in five different cities: Curitiba (in Brazil), New York (for Manhattan only), San Francisco, Singapore, and Vienna. The total number of trips recorded varies between 300.000 in Vienna to 150 million in New York.
Utilizing the data as a proxy for the total demand for ride-hailing, the researchers also modeled the traffic flow required to transport all passengers at the highest efficiency and scenarios where multiple companies were competing independently of one another. This technique helped the team isolate the effect of adding new companies to a specific market.
In the end, the researchers found that adding a typical-sized ride-hailing service to the market had different impacts on the number of vehicles utilized to satisfy demand. In Manhattan, the new company that enters the market will only increase the number of ride-sharing cars by 3 percent. In Singapore, this figure is 8 percent, and in Curitiba, the figure is 67 percent. Researchers refer to this as”the “cost of noncoordination” in the business.
“We think it’s positive to have multiple providers,” Santi says. Santi. “But if they are not coordinated, there is a price to pay, so to speak.”
Ratti says: “If you allow everyone to maximize independently, it creates more congestion. It’s not possible to get the nearest vehicle — you could receive an Uber car that’s further from you, but there might be an Lyft car right next to you.”
The main factors that affect the number of vehicles required are the volume of demand for passengers and the average traffic speed. In Manhattan, where customers are close to each other, adding a company to the market won’t significantly alter the number of vehicles used to serve all clients within the city. In Curitiba in Brazil, where the passengers are more dispersed, the new ride-hailing business operating on its own will bring about a more significant number of vehicles being put on the road.
“If there is very dense demand, even if you do not coordinate, you still have a good pool of vehicles to draw from [nearby], and efficiency is still pretty good,” Santi says. “If you live located in a city that does not have this density of demand coordination is expensive. Another factor is the speed at which traffic moves. In a market with no coordination there may be a need for the use of a vehicle further than. If the speed of traffic is high, it could be ok, but when the speed of traffic isn’t high, it may be inefficient to serve this customer.”
Many companies One platform?
Ratti, Santi, and their colleagues claim their findings strongly support having one principal ride-sharing service for customers in the city, which any competing company could benefit from. This could increase efficiency, regardless of whether competition in the market exists.
“Certainly this doesn’t mean arguing for less competition,” Ratti states. “We can mix the benefits of competition and efficiency using an integrated platform. It’s all about regulation by cities. They are highly regulated markets, therefore there’s nothing innovative.”
As Santi says, “These kinds of digital platforms already exist in many U.S. cities for micromobility,” bicycle-sharing services. “That’s a model that could also work for on-demand mobility like Uber and Lyft.”
The extent to which metropolitan areas move in this direction is yet to be determined. The model presented in the paper gives cities a tool that experts can use to continue improving their traffic and mobility policies.
