Regulation Of Drivers In Ride-Sourcing Service Market: A Two-Sided Market Analysis

The development of ride-sourcing services has brought severe challenges to government regulation.At present,264 cities in China have promulgated regulations on the management of ride-sourcing,which provide specific provisions on important issues such as the entry and behaviors of drivers.However,whether the driver regulation is necessary,the impact of the regulation and how to regulate the driver of ride-sourcing market are still controversial.In terms of the disputes in the practice of driver regulations,this paper combines the twosided market theory and mainly focuses on the regulation issues of single-homing regulation and the driver qualification.Then we established the Hotelling models of ride-sourcing twosided market under the driver regulation of single-homing and driver qualification.In order to make the model more in line with the characteristics of transportation industry,we introduce the pricing structure including rate,the average transport distance and the number of transactions on the basis of Armstrong(2006)model and set the parameter of driver regulation intensity to construct the utility function and further take the actual drivers partial muti-homing condition into account.Through theoretical analysis and numerical simulation,this paper analyzes the variation of social welfare and welfare variation of all parties after regulation,and discusses the influence of the relative size of cross-group network externalities(CGNEs),time costs and driver sharing ratio.The results show that: after the regulation of driver single-homing,passengers’ surplus and social welfare will decrease,the platform profits will increase.Only when the externality from drivers to passengers is larger,drivers’ surplus will increase.The relative size of CGNEs and the time costs of bilateral users have no influence on the trend of increase or decrease of social welfare.The enhancement of CGNEs will promote the increase of social welfare of muti-homing driver condition,while the increase of bilateral users’ time costs will reduce the social welfare of this condition.After the regulation of the driver qualification,the passenger’s surplus will decrease and only when the externality from passengers to drivers is larger,the drivers’ surplus will increase,and only when the externality from drivers to passengers is larger,platform profits and social welfare will increase significantly.The increase or decrease trend of social welfare after regulation only depends on the relative size of CGNEs between passengers and drivers,and the increase of regulation intensity will increase the change amplitude of social welfare.The study provides evidence that driver single-homing regulation in ridesourcing market can’t achieve the purpose of improving social welfare.The government should encourage the behavior of driver multi-homing,and guide the good market competition environment.At the same time,it is necessary to implement differentiated and tailored regulations on drivers’ qualification according to CGNEs characteristics of ride-sourcing platforms,so as to promote the collaborative governance of multi-stakeholder in the ride-sourcing market,and accelerate the compliance of the ride-sourcing industry.