Ridesharing Platforms and the Long Tail of Mobility

Uber and Lyft are the poster children of digitally-enabled ride-sharing companies. But these intra-urban on-demand services are not the only ones disrupting how people move. Intercity, longer distance travel has also seen changes due to algorithmic enabling: It’s a different market space where competition is with buses, trains and flights rather than taxis, and where platforms provide access to the long tail of transport supply and demand: more diverse locations and frequency than competitors. In this article, we provide a brief description of the digitally enabled intercity travel business, how it started, and its current state. We highlight some of the differences with the woes of ride-hailing. Particularly, we highlight how the service has not shifted to professionals, and argue that driver supply is the main bottleneck for these platforms, and dissect some of the ways these platforms incentivize different types of drivers. We conclude by pin-pointing some aspects that competition policy should be aware of in this market segment, particularly with current mergers among bus companies.

By Rossi Abi-Rafeh,¹ Emil Palikot²

I. THE IMPACTS OF DIGITAL TECHNOLOGY ON RIDESHARING

A handful of tech companies have revolutionized transportation: today many urbanites who grew up considering hailing a cab a luxury order one within minutes of pressing a button on their smartphones. Indeed, these companies – Uber being the most prominent – b