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Spatial Distribution Of Supply And The Role Of Market Thickness: Theory And Evidence From Ride Sharing, Soheil Ghili, Vineet Kumar
Spatial Distribution Of Supply And The Role Of Market Thickness: Theory And Evidence From Ride Sharing, Soheil Ghili, Vineet Kumar
Cowles Foundation Discussion Papers
This paper studies the e ects of economies of density in transportation markets, focusing on ridesharing. Our theoretical model predicts that (i) economies of density skew the supply of drivers away from less dense regions, (ii) the skew will be more pronounced for smaller platforms, and (iii) rideshare platforms do not nd this skew ecient and thus use prices and wages to mitigate (but not eliminate) it. We then develop a general empirical strategy with simple implementation and limited data requirements to test for spatial skew of supply from demand. Applying our method to ride-level, multi-platform data from New York …
Spatial Distribution Of Supply And The Role Of Market Thickness: Theory And Evidence From Ride Sharing, Soheil Ghili, Vineet Kumar
Spatial Distribution Of Supply And The Role Of Market Thickness: Theory And Evidence From Ride Sharing, Soheil Ghili, Vineet Kumar
Cowles Foundation Discussion Papers
This paper develops a strategy with simple implementation and limited data requirements to identify spatial distortion of supply from demand -or, equivalently, unequal access to supply among regions- in transportation markets. We apply our method to ride-level, multi-platform data from New York City (NYC) and show that for smaller rideshare platforms, supply tends to be disproportionately concentrated in more densely populated areas. We also develop a theoretical model to argue that a smaller platform size, all else being equal, distorts the supply of drivers toward more densely populated areas due to network effects. Motivated by this, we estimate a minimum …