Non-discriminatory operating policies for ridesharing platforms with dual capacities

Abstract

Many ridesharing platforms operate with dual capacities. They employ full-timers, in addition to independent service providers (also known as self-schedulers). Unlike self-schedulers, full-timers work exclusively for a platform and have limited flexibility. While allocating demand between the two capacities, a platform could prioritize its own full-timers over self-schedulers (preferential policy). This preferential treatment is considered discriminatory and, hence, illegal, even though it may maximize profits. Ridesharing platforms, therefore, have to explore alternative operating policies to overcome this legal hurdle. This study is a step towards helping platform managers identify the best alternative (or at the least the second-best alternative) to the controversial preferential policy. It explores two alternative non-discriminatory policies—contingency capacity policy (self-schedulers get higher priority in demand allocation) and common-pool policy (equal preference to the two capacities). A major finding of this study is that the contingency capacity policy, the most altruistic among the three policies, can deliver optimal profits for asset-light platforms (platforms with fewer full-timers). Managers of asset-light platforms could leverage the altruistic nature of the contingency capacity policy to attract more self-schedulers to join the platform and derive a significant competitive advantage.

Keywords:

• Ridesharing
• operating policies
• sharing economy
• non-discrimination
• platforms

Disclosure statement

No potential conflict of interest was reported by the author(s).