Multihoming in Ridesharing: Welfare and Investment (with Amit Gupta)
We propose a model of competing ridesharing platforms that allows us to analyze the impact of multi-homing on drivers and riders. We show that when platforms are symmetric, multi-homing is socially superior to single-homing, providing higher surplus to both drivers and riders. However, when platforms are asymmetric, new harms arise: multi-homing decreases the incentives for a platform to invest in more efficient matching technology, which may ultimately reduce welfare for riders and drivers in the long term. Furthermore, multi-homing increases the risk of an efficient platform monopolizing the market, which would hurt both riders and drivers. Thus, multi-homing may offer short-term benefits but long-term harms to all market participants.
There is a growing interest in the use of income-share agreements to finance higher education. This paper aims to offer the first game-theoretic model of how such ISAs could affect the incentives of students to acquire human capital, and the incentives of universities to supply education. I find that ISAs highlight a tension between different policy goals: relative to tuition pricing, ISAs increase the availability of education, but reduce student productivity. In a duopoly environment, where both universities can choose a pricing model, the dominant strategy equilibrium is for both universities to choose tuition pricing. Furthermore, this equilibrium is efficient: tuition pricing maximizes both the availability of education and the productivity of education, so it is socially superior to ISA pricing.