Balancing Supply with Demand on Ride-Hailing Platforms in Markets with Price Regulations: An Operational Approach.

The article focuses on addressing the supply-demand imbalance in ride-hailing platforms through operational incentive schemes as alternatives to surge pricing, particularly in markets with regulated and inflexible prices. It proposes two schemes: the qualification scheme, which restricts off-peak work to drivers meeting a peak-period work target, and the prioritization scheme, which prioritizes such drivers for off-peak requests but allows others to serve as well. Analysis shows that in closed systems (only full-time drivers), the qualification scheme yields higher total matching volume but reduces driver welfare more than the prioritization scheme; conversely, in open systems (including abundant part-time drivers), the prioritization scheme outperforms the qualification scheme in matching volume and can improve both platform performance and full-time driver welfare. The study also compares these schemes with surge pricing, finding that incentive schemes can achieve similar or better outcomes without requiring price increases, offering practical insights for platforms and policymakers in regulated markets.