Pricing Shared Rides

Pricing Based on Matching Outcomes Improves Shared Rides Operations Shared rides aspire to mitigate congestion and promote more sustainable urban transportation, but many platforms struggle to maintain a healthy and profitable shared rides product. Why have shared rides struggled, and how can platforms design a successful product? In “Pricing Shared Rides,” Chiwei Yan, Julia Yan, and Yifan Shen discuss the drawbacks of platforms’ existing pricing policies and show that a common approach to pricing suppresses demand and may even drive the platform out of the market. They then propose adjusting the price according to the extent she is matched with another rider—which proves to benefit both platform and riders alike in increased profitability and reduced payments. These benefits are especially pronounced in regimes with high cost and low demand, expanding shared rides access to areas where they have historically been most challenging to sustain.