演讲题目：Bidding or Allocation? The Design of Dispatch Systems in the Ride-Hailing Market
Previous studies have shown that dispatch systems, which use innovative technology to match riders with drivers, can substantially reduce search frictions and are therefore more efficient than conventional street hails. However, how to design dispatch systems has not been fully investigated in the literature. Two dispatch systems are common in practice: a bidding system, in which drivers bid for a booking request, and an allocation system, in which drivers are allocated to riders by ride-hailing platforms based on algorithms. We developed and estimated a structural model for the ride-hailing market to compare the advantages and disadvantages of these two dispatch systems. On the demand side, we modeled riders to arrive stochastically in each location in each time and make a discrete choice over the means of transportation, including hailing a taxi on the street, booking a taxi through the company's booking system, and an outside option. On the supply side, we modeled taxi drivers' decisions over a shift as a finite-horizon dynamic oligopoly game with a two-stage sequential decision in each period. In the first stage, drivers decide whether to pay an attention cost to enter the matching pool for booking trips; in the second stage, unmatched drivers make relocation decisions by deciding which location to head to in order to search for passengers in the next period. We applied our structural model to Singapore's taxi market, where a leading ride-hailing company used a bidding system for booking trips during the data period. We estimated the structural model with detailed trip data and a parametric matching function that enabled us to back out unobserved potential demand for street-hail trips from the high-frequency, large-scale GPS data. Based on the structural estimates, we conducted counterfactual analyses by replacing the bidding system with an allocation system and made a comprehensive comparison across the two systems. We found that an allocation system could significantly improve drivers' time utilization and earnings than a bidding system, but it would incentivize more drivers into the booking pool and reduce the number of drivers for street hails, and hence increase riders' unfulfilled demand for street-hail trips. Our results provide important managerial implications for the design of dispatch systems in the ride-hailing market.
Zhang Xueli is a postdoctoral research fellow in Marketing from the National University of Singapore. He received his Ph.D. degree in Marketing from Nanyang Technological University in 2021, a Master's degree in Finance from Wuhan University in 2016, and a Dual Bachelor's degree in Mathematics and Economics from Wuhan University in 2013. His research interests are mainly in platform design, e-commerce, and social media.