5 - Ride-Hailing Platforms

Summary

This chapter reaches more ambiguous conclusions with regard to the natural monopoly features of ride-hailing platforms such as Uber. While ride-hailing service providers benefit from indirect network externalities between drivers and passengers, which therefore represent a potential source of natural concentration on the demand side, their force is not infinite, and is likely to taper off after a thick and sufficiently large network is reached. The possibility of natural monopoly is as a result largely dependent on the local conditions of demand in a given geographical market. Given these more ambiguous conclusions, this chapter evaluates alternative policy approaches that may be pertinent to ride-hailing depending on the strength of natural concentration, including regulation, franchise bidding, and competition policy enforcement.