Matching supply and demand on ride-sharing platforms with permanent agents and competition

Ride-sharing platforms, as a new travel service, yield substantial benefit by effectively matching drivers and passengers. We consider ride-sharing platforms that recruit permanent and/or temporary, i.e., self-scheduling, agents to provide on-demand services requested by riders. The permanent agents of a platform are paid a fixed wage by the platform, whereas the temporary agents are self-scheduling and offered a subsidy by the platform for the services they provide. In this paper we assume that the market is supply-dominant, i.e., the number of riders seeking on-demand services is sufficiently large and the price charged to each served rider is determined by the number of agents available on the platforms. In both monopoly and duopoly competition environments, we determine the subsidy level for the temporary agents and/or the employment level of the permanent agents that balance the agents' supply and the riders' demand to maximize the platforms' profits. Furthermore, we examine the impacts of both the employment of permanent agents and platform competition on the platforms' subsidy strategies and profitability, participants’ surpluses, and social welfare. We also discuss the managerial implications of the research findings.