Comprehending the Pricing Decision of Online Car-Hailing Services in China: Price Regulation Vs Entry Limitation.

Online car-hailing service has had an exponential growth in recent years, and poses a substantial threat to taxi service. Yet how to regulate online car-hailing service has not been adequately studied. Based on the regulation of tradition taxi service, price regulation and entry limitation are used to regulate online car-hailing service in this paper. Moreover, we consider two types of online car-hailing service, i.e., high-end service(e.g. UberBlack) and low-end service (e.g., UberX), according to the perceived service level. Then, the optimal platform’s price is formulated. The result shows that the price regulation are likely to increase the optimal platform price, depending on the service type and the taxi price. When the platform offers low-end service and the taxi price is low, the optimal platform price does not change. In contrast, the entry limitation reduces the optimal platform’s price when it achieves the regulation target.