Research suggests how much competition in the urban travel market can grow before gridlock sets in

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In theory, competition between ride-sharing companies should be a good thing, giving consumers more options. In practice, having too many VTCs adds to urban congestion. How can cities balance these factors?

A new study co-authored by MIT researchers, in collaboration with Italy’s National Research Council’s Institute of Computing and Telematics, provides a model that shows just how much ride-hailing competition is clogging the streets, allowing analysts and policy makers to estimate how many vehicles and companies could form an optimally sized market in a given metropolitan area.

“What this shows is that by not coordinating ride-sharing companies, we’re creating an enormous amount of extra traffic,” says Carlo Ratti, a professor in MIT’s Department of Urban Studies and Planning (DUSP) and co-author of a new paper. detailing the results of the study. “If cities were to use a platform to coordinate carpooling, we could reduce overall congestion and traffic in cities around the world.”

The article, “The cost of non-coordination in on-demand urban mobility”, is published today in Nature Science Reports.

The authors are Daniel Kondor, researcher at the Singapore-MIT Alliance for Research and Technology (SMART); Iva Bojic, researcher at SMART; Giovanni Resta, researcher at the Institute of Informatics and Telematics of the National Research Council of Italy; Fabio Duarte, lecturer at DUSP and principal investigator at MIT’s Senseable City Lab; Paolo Santi, Senior Researcher at Senseable City Lab and Research Director at the Institute of Informatics and Telematics of the National Research Council of Italy; and Ratti, who is a professor of urban technologies and planning at DUSP and director of the Senseable City Lab.

Measure the cost in terms of traffic

To conduct the study, the research team obtained anonymized data on taxis, to determine where people request rides from, for five cities: Curitiba (in Brazil), New York (for Manhattan only), San Francisco, Singapore and Vienna. The number of recorded trips ranged from 300,000 in Vienna to 150 million in New York.

Using this data as a proxy for all rideshare demand, the researchers then modeled the traffic flow needed to pick up all passengers with optimal efficiency, as well as scenarios in which multiple companies competed independently of each other. This approach allowed the team to isolate the effects of adding new ridesharing companies to a given market.

Ultimately, the researchers found that adding a standard-sized ride-sharing company to the market had varying effects on the number of vehicles that would be deployed in an attempt to meet demand. In Manhattan, a new competitor entering the market would only increase the amount of transport vehicles by about 3%. In Singapore, this figure is 8% and in Curitiba it is 67%. This is what researchers call the “cost of non-coordination” in industry.

“We think it’s positive to have multiple suppliers,” says Santi. “But if they’re not coordinated, there’s a price to pay, so to speak.”

Ratti adds, “If you allow everyone to optimize independently, it generates additional congestion. You don’t get the closest car, you can get an Uber car that’s further away, although there may be be a Lyft car next to you.”

The main factors affecting the number of vehicles needed are the density of passenger demand and the average speed of traffic. In Manhattan, with customers closer together, adding a new company to the market will not dramatically change the number of vehicles deployed to support all customers in the borough. In Curitiba, where passengers are more dispersed, a new ridesharing company operating alone would drive a much larger proportion of new vehicles on the road.

“If there’s really heavy demand, even if you don’t coordinate, you still have a good pool of vehicles to draw from. [nearby], and the efficiency is still quite good,” observes Santi. “If you are in a city without this density of demand, non-coordination is expensive. The other factor is traffic speed. In an uncoordinated market, you may need a vehicle further away. If the traffic speed is high, it may be fine, but if the traffic speed is low, it may be very inefficient to serve that customer.”

Multiple firms, one platform?

Ratti, Santi and their colleagues say the results strongly point to the policy of having a primary ride-sharing platform for consumers in a given city that all competing companies could use. This could improve efficiency even if competition in the market still exists.

“That certainly doesn’t mean advocating for less competition,” Ratti says. “We can combine competition and efficiency using a common platform. It’s just a matter of regulation by cities. And these are heavily regulated markets, so we’re not advocating for anything new.”

And as Santi points out, “These kinds of digital platforms already exist in many US cities for micromobility,” i.e. bike-sharing services. “It’s a model that could also work for on-demand mobility like Uber and Lyft.”

Whether metropolitan areas will move in this direction remains to be seen. Still, the modeling in the paper provides at least a tool that experts in any city could use to continue refining their mobility and traffic policies.

Ride-sharing services don’t always increase traffic congestion, study finds

More information:
Dániel Kondor et al, The cost of non-coordination in on-demand urban mobility, Scientific reports (2022). DOI: 10.1038/s41598-022-08427-2

Provided by Massachusetts Institute of Technology

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