Surge pricing on a service platform under spatial spillovers: evidence from Uber

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Date
2019-08-01
DOI
Authors
Lee, Brad
Bellamy, Marcus
Jiang, Shan
Wilson, Christo
Joglekar, Nitin
Version
First author draft
OA Version
Citation
Brad Lee, Marcus Bellamy, Shan Jiang, Christo Wilson, Nitin Joglekar. 2019. "Surge Pricing on a Service Platform under Spatial Spillovers: Evidence from Uber." Academy of Management Proceedings. Academy of Management Annual Meeting. Boston, MA, 2019-08-09 - 2019-08-13.
Abstract
Ride-sharing platforms employ surge pricing to match anticipated capacity spillover with demand. We develop an optimization model to characterize the relationship between surge price and spillover. We test predicted relationships using a spatial panel model on a dataset from Ubers operation. Results reveal that Ubers pricing accounts for both capacity and price spillover. There is a debate in the management community on the ecacy of labor welfare mechanisms associated with shared capacity. We conduct counterfactual analysis to provide guidance in regards to the debate, for managing congestion, while accounting for consumer and labor welfare through this online platform.
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