Pricing strategies for a taxi hailing platform
Taxi hailing apps that facilitate taxi customer matching quickly become popular in recent years. By combining the theories of two sided market and taxi market, this paper models the taxi market in the presence of a single taxi hailing app through an aggregate and static approach. Based on the equilibrium model, the existence and stability of equilibria are examined, and a partial derivative based sensitivity analysis is conducted to quantitatively evaluate the impacts of the platform's pricing strategies to the taxi market performance. The features of desirable price perturbations that improve social welfare and/or the platform's profitability are also characterized.