The Ride-Sourcing Industry: Status-Quo And Outlook

Ride-sourcing, the use of private cars to provide on-demand mobility services, first appeared in San Francisco around the year 2010. Since then, transportation network companies (TNCs) who offer ride-sourcing services have expanded all around the world. By examining three case cities (San Francisco, Mexico City, Paris) we explain what facilitated this growth and how the regulation of TNCs differs. Subsequently, an economic analysis discusses the current expansionary strategy of TNCs and their future. We show that TNCs adapt their strategies to local contexts, with first priority to establish themselves in the market, if necessary, using gray regulatory areas, even if they face resistance from city authorities, taxi drivers and other groups, and despite being unprofitable. Our economic model explains this. We show that an unregulated ride-sourcing market leads to monopolistic situations once autonomous vehicles become available. We hence conclude that city authorities need to develop a regulatory framework to maximize social welfare.