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Friday, October 4
Fri, Oct 4, 2:30 PM - 3:45 PM
Evergreen I
Speed Session 4

Welfare Analysis of Spatiotemporal Resource Allocation in the Car-Sharing Industry (306562)

*Hee Jung Jung, University of Washington 

Keywords: Car-sharing, dynamic pricing, sharing economy, free-floating car-sharing, fixed pricing, allocative efficiency

Free-floating car-sharing services have revolutionized the car-sharing service by allowing users to pick up a car wherever and whenever they want and leave them anywhere. However, there are market allocation issues - there are unused cars in one place when people are looking for cars in other places. To better understand the market condition and estimate consumer welfare, I build a dynamic spatial model using ReachNow, a car-sharing company based in Seattle, trip information data from its launch in April 2016 to October 2018. Since ReachNow institutes usage-based fixed-pricing scheme, unlike Uber’s surge pricing, it is impossible to estimate demand in the conventional manner. Therefore, I use the matching theory for demand estimation. I also apply dynamic optimization methods to estimate supply. Due to the misallocation, I expect demand and supply to be mismatched. Ultimately, I provide a dynamic pricing scheme as a counterfactual and show improved allocative efficiency.