Ridesourcing and Ride Sharing
Ridesourcing initially emerged as a disruptor of the traditional taxi industry, which was heavily regulated and featured strict limits on the number of licensed taxis in most areas. The ridesourcing model combined GPS location services with app-based booking and payment, and enabled rapid supply adjustments to respond to daily and weekly demand peaks by leveraging private vehicles on a part-time basis. These innovations led to important efficiency gains and enhanced economic welfare. In addition, by exploiting regulatory grey areas, ridesourcing substantially increased the supply of taxi-like services, removing market distortions and further increasing economic welfare.
More recently, GPS tracking and app-based booking and payments technologies have been widely adopted by traditional taxis, so that the two services are often close substitutes from the consumer viewpoint. Nonetheless, the advent of ridesourcing has led to enduring increases in supply, flexibility and efficiency in the taxi-like service sector.
Ride sharing is the sharing of a vehicle trip by at least two riders. Successful ride sharing requires co‑ordination with respect to itineraries – i.e. the specification of pickup and drop-off points of the passengers. Ridesharing has long existed to a limited extent in the traditional taxi sector (e.g. airport rank based sharing), and in the context of carpooling schemes. However, the development of ridesourcing platforms has significantly expanded the sector. Ride sharing services are often provided by an online platform that “matches” people who seek to take a similar trip and are willing to share a vehicle for at least part that trip. Ridesourcing and ride-sharing services are often offered on the same platform, and sometimes in combination (i.e., a person hails a ride and accepts the option of sharing the ride with a fellow passenger to reduce their trip costs, if one can be identified).
The CO2 impacts of ridesourcing and ridehailing will differ, while the outcome will necessarily be context-specific, in both cases. Both service types have the potential to contribute to reduced CO2 emissions, but neither will necessarily achieve this outcome. The impact of other, related transport policies is fundamental in determining their impact in practice.
Much early research found increases in total kilometres travelled by vehicles after the entry of ridesourcing to a market, with much demand representing additional trips or being diverted from more sustainable modes. However, the impact of ridesourcing in counteracting artificial, regulatory restrictions on the supply of taxi-like services seems to explain much of this change. Other research has found only small overall effects on kilometres travelled by vehicles, while there is some evidence of ridesourcing acting to increase public and active transport use and reduce private car ownership.
A key finding is that ridesourcing it is more likely to be used for first/last mile purposes in a multi-modal journey. Thus, ridesourcing is likely to have a positive impact on CO2 emissions where comprehensive sustainable urban mobility plans, supporting modal shifts toward public and active transport, are in place. Policies that support the development of MaaS, which may further contribute to multimodality by providing additional efficiency and convenience benefits, could further improve CO2 outcomes.
Another factor is that some major ridesourcing providers have adopted policies that will see large proportions of their fleets comprised of EVs in the medium term. This suggests that ridesourcing could contribute to lower CO2 emissions where they substitute for private vehicle use. In addition, there may be a case for adopting regulatory requirements for sections of the vehicle fleet that cover high average mileages – such as taxis and ridesourcing vehicles – to meet higher environmental standards than are imposed on the general fleet.
The considerations affecting ridesharing are broadly similar, particularly given that ridesharing is often offered on the same platforms, using the same vehicles. However, shared rides clearly imply lower emissions per passenger. Thus, shared rides are often considered to have greater potential to reduce CO2 emissions. That said, some modelling suggests that “rebound effects” – particularly due to the availability of cheaper car travel via sharing leading to modal switch away from public and active transport – may offset a large proportion of the potential benefits. This, again, points to the importance of complementary policies, such as road user charging and improved public transport.
Ride-sharing/-hailing services typically require the development of a smartphone application and the recruitment of drivers who would like to operate via the application. Often the dispatcher (platform provider) gets a fixed fee per ride for the provision of the system. The drivers are often not direct workers of the company.
Authorities will need to cover the costs for the appropriate licensing of such services and related enforcement activities.
Research suggests that the rise of ridesourcing has both increased the geographic availability of taxi-like services and increased the effective access to such services of some disadvantaged groups, and those subject to discrimination in traditional taxi markets. The entry of ridesourcing has also typically driven down the price of taxi-like services. Thus, ridesourcing can provide important accessibility benefits, which will be further enhanced if it is effectively integrated with high-quality public transport.
Ridesharing can potentially further increase accessibility while, to the extent that it substitutes for single-passenger journeys, it may also contribute to reduced congestion costs.
Governments have generally reached the conclusion that ridesourcing can be subjected to lighter handed regulation than the traditional taxi centre, giving rise to significant additional cost-savings, and hence efficiency gains, in the sector.
Some negative accessibility impacts have also been identified. These largely relate to the fact that the default booking and payment arrangements are via smartphones and credit cards, thus potentially excluding those without access to these. However, regulatory responses requiring ridesourcing providers to provide alternative access arrangements have been developed and can address these issues.
The uncertain status and lack of employment benefits of drivers has been the subject of criticism. However, this issue is one of more general application, which is shared with other parts of the “gig economy”, as well as the traditional taxi sector.
In some, very dense inner-urban contexts, there is some evidence of high concentrations of ridesourcing vehicles contributing to traffic congestion via on-street pick-up and drop-off activity.
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