Uber, DiDi, and their ilk thrive where economic gaps loom large. At TU Delft, researchers simulated how these ride-hailing services fare in societies with varying levels of inequality. They found that in some cities, these platforms rule the mobility scene, while in others, they struggle to gain traction.
Imagine a world where everyone earns the same. Or one where one person holds almost all the money. TU Delft’s study explored these extremes of inequality and their impact on ride-hailing markets like Uber and DiDi. Their findings show a clear link between how unequal a society is and how dominant these platforms become.
“These extremes help contextualize real-world dynamics, where all societies worldwide fall somewhere in between,” the researchers explain.
Sustainable future
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“In cities like Amsterdam, with relatively low inequality, short travel distances and well-established bicycle and public transport networks, Uber is unlikely to flourish,” the authors continue. “Therefore, transport authorities in such cities should rather focus on providing shared bikes and scooters to improve station access.”
In contrast, in cities characterized by stark inequality, such as Johannesburg or Rio de Janeiro, platforms akin to Uber flourish. The study uncovers various factors, including the behaviors of both drivers and passengers, to explain this phenomenon.
These platforms benefit from a workforce willing to accept lower pay, resulting in minimal wait times for passengers. Furthermore, they cater to the demand for on-demand mobility among the affluent in unequal societies, who are willing to pay a premium for such services.
Unhealthy dominance
These findings shed light on the potential dominance of Uber-like services within mobility frameworks. They also offer insights into designing inclusive mobility systems and evaluating the need for regulatory intervention.
“In a society with high inequality, companies can charge higher commissions to drivers, as drivers have limited alternative labor opportunities,” the researchers say. “On the other hand, in societies with low inequality, all else being equal, pricing strategies must attract more selective job seekers, resulting in lower commission rates.”
This highlights how socio-economic conditions influence the success of ridesourcing platforms. Given the scarcity of data on ridesourcing market shares across cities, researchers opted to simulate the behaviors of key market participants and test various market scenarios.
Their model could prove valuable in exploring inequality dynamics in meal and grocery delivery markets, facilitated by platforms like Just Eat Takeaway and Getir. These services also thrive on a customer base with relatively higher incomes, willing to pay for convenience, and a workforce willing to accept lower wages.
