Ride-hailing for the greater good

As usage of ride-hailing services continues to grow, the performance of transportation network companies (TNC), such as Uber and Lyft, is also evolving, particularly in regards to pricing at times of heightened traffic congestion. As cities attempt to reduce the amount of cars on the road and ultimately emissions at peak travel times, they also struggle to develop inexpensive and equitable solutions to improve transportation network performance.

While multiple interventions have been tested to influence rider behavior, there are technical, financial, and social equity implications associated with current solutions, such as congestion pricing, parking pricing, and tolling. A recent study by Sean Qian and Zemian Ke proposes an optimal ride-hailing pricing (ORHP) system that could address these concerns.

Through ORHP, a subsidy is provided to transportation network companies in exchange for the improvement of the network as it pertains to route selection. Public agencies can set a surcharge or credit for selected roadway segments that would be used by non-private driving TNC vehicles.

“Public agencies have been investing in implementing tolling or pricing to manage traffic,” noted Qian, a professor of civil and environmental engineering. “TNC serve as a pricing and sensing platform that can be leveraged, without upfront capital investment.”

Through these disincentives, riders are provided with multiple route options, and incentivized to take a ride that may deviate from the shortest possible route through lower fares or other compensation offered by the TNC. This system is based on the premise that a TNC fleet, once reaching a small fraction of market penetration, could have influence on general traffic flow patterns and serve its own best interest in improving fleet efficiency.

The ultimate goal is to reduce congestion in a sustainable and equitable manner.

Sean Qian, Professor, Civil and Environmental Engineering

“TNC riders can voluntarily participate in choosing deviated routes with compensation,” said Qian. “The ultimate goal is to reduce congestion in a sustainable and equitable manner.”

While the decision ultimately falls upon the rider to take a longer route that will assist in reducing traffic congestion, both TNC and public agencies stand to benefit from both a service and profit standpoint. Total costs could be reduced for transportation network companies as fleet vehicle travel time can be better optimized through this system, and the financial benefits of the subsidies could be shared by both riders and service providers.

Even a relatively small investment was shown to yield promising outcomes. The study led by Qian and Ke, a Ph.D. student, sponsored by the National Science Foundation, conducted case studies in Sioux Falls and Pittsburgh networks, finding that optimal ride-hailing pricing with small subsidies reduced the total travel time by balancing general traffic on both over-congested links and under-congested links.

As research and modeling for the ORHP continues to be studied, there are implications for considering the impact of idling and pickup flow, as well as consideration of factors influencing travelers’ choices on modes of TNC, private driving, or public transit.

The research team has filed a provisional patent, and hope to pilot this concept in regional networks that could benefit most from a partnership between TNC and public agencies.