A Competitive Model for Uber and Conventional Taxicab Service Platforms
Date Issued
2015
Date
2015
Author(s)
Hsu, Tun-Tzu
Abstract
Taxicab Uber, launched in 2010, has expanded its taxicab services rapidly by using innovative information technology. In the early stage of introducing an innovative service, the service provider may need to face challenges from the existing legal restrictions and the protests from those who have provided similar services (environment uncertainty). In addition, the service quality provided by conventional taxis may fluctuate trip by trip (quality uncertainty). Therefore, in this thesis, we propose a model to analyze how the Uber and conventional taxicab service platforms are affected by customer’s preference toward quality of service, the degree of accepting innovative information technology, and the uncertainties of environment and quality. Our results show that Uber earns more profit when the competition of market is intense (weak) and the technology acceptance is low (high). Under the uncertainties, which platform is more profitable is decided by trading off the advantage in degree of technology acceptance and the advantage in uncertainties. When the degree of technology acceptance is low, both platforms can earn more profit if the combined effect of the environment and quality uncertainties gets closer to zero. On the other hand, they can earn more profit if the combined effect gets higher when the degree of technology acceptance is high. The analytical results can provide some strategic insights for platforms and help them formulate competitive strategies to earn more profit.
Subjects
Competitive model
taxicab service platform
technology acceptance
uncertainty
Type
thesis
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