The Price of Fragmentation in Mobility-on-Demand Services

Abstract

Mobility-on-Demand platforms are a fast growing component of the urban transit ecosystem. Though a growing literature addresses the question of how to make individual MoD platforms more efficient, much less is known about the cost of market fragmentation, i.e., the impact on welfare due to splitting the demand between multiple independent platforms. Our work aims to quantify how much platform fragmentation degrades the efficiency of the system. In particular, we focus on a setting where demand is exogenously split between multiple platforms, and study the increase in the supply rebalancing cost incurred by each platform to meet this demand, vis-a-vis the cost incurred by a centralized platform serving the aggregate demand. We show under a large-market scaling, this Price-of-Fragmentation undergoes a phase transition, wherein, depending on the nature of the exogenous demand, the additional cost due to fragmentation either vanishes or grows unbounded. We provide conditions that characterize which regime applies to any given system, and discuss implications of this on how such platforms should be regulated.

Publication
2018 SIGMETRICS/Performance Joint International Conference on Measurement and Modeling of Computer Systems

Journal version: Sejourne et al. (2018).

Siddhartha Banerjee
Siddhartha Banerjee
Associate Professor

Sid Banerjee is an associate professor in the School of Operations Research at Cornell, working on topics at the intersection of data-driven decision-making, market design, and algorithms for large-scale networks.