Imagine Travis Kalanick, the ousted founder of Uber, opening his company’s app in New York City and finding a surprise: a listing of taxis. After a decade of lawsuits and bitter confrontations, Uber is making taxis an option for its users in New York.
This move is both a marriage of necessity and convenience, as Uber is trying to compensate for an expensive driver shortage. However, our research at MIT, recently published in Nature’s Scientific Reports, shows that coordination between ride-hailing services can benefit the entire city by reducing traffic and slashing carbon emissions. In fact, Uber’s big leap should only be a first step: Cities should push for combining all mobility options into integrated digital platforms.
Advertisement
Why does it help for Ubers and taxis to work together? Today, an Uber customer might hail a car two miles away, even though there was a taxi just around the corner. Non-coordination means larger fleets and longer trips. It also gives an unfair advantage to bigger players; users tend to open the app with more available cars even if a smaller player offers better prices or other conditions. In the language of economics and game theory, cities are paying “the price of anarchy” — in which each selfish actor (in this case, ride-hailing companies) optimizes its own performance at the expense of overall efficiency.
Our research has quantified the price of anarchy for urban mobility in Singapore, New York, San Francisco, Vienna, and Curitiba, Brazil. Analyzing hundreds of millions of trips, we found that non-coordination has a more negative impact in some cities than in others, based on the overall density of travel and the efficiency of operators. In Curitiba, non-coordination could result in 67 percent larger fleets on the road. That number is only 10 percent in Manhattan, but even 10 percent more ride-hailing cars can make a big difference in the dense, congested streets of New York. The price of anarchy is high: generating extra carbon emissions in a world that is already in the grips of a climate emergency.
Advertisement
Based on our results, Uber’s leap should be just the first step. Instead of wavering and flipping through Uber, Lyft, and taxis, imagine a world in which we could open a single app that figures out which service is both the closest and the most affordable. Upon choosing, we would be redirected to the app of our chosen provider, enjoying all of its unique features for rating, tipping, and more. Such a model already exists with digital flight aggregators, such as Expedia or Travelocity; now imagine it at the scale of the city.
Some ride-hailing companies might not want to collaborate — especially larger firms that benefit from their dominant position. This is why governments should take the lead. After all, urban transportation has long required regulation — consider how taxi commissions around the world manage the supply of cabs by awarding medallions that permit drivers to operate. Today, municipal governments need to guide companies like Uber into a new world, as they started doing with the Open Mobility Foundation. With their efforts, the new market for ride-hailing services can develop into a mature, socially responsible component in the lives of our cities.
Would counteracting the inefficiencies of non-coordination decrease competition? In some instances, it is true that the price of anarchy can be reduced by a centralized, “dictatorial” approach. However, in the case of urban ride-hailing, better access to information would result in both increased competition and favorable social outcomes. On an integrated digital platform passengers will be able to seamlessly compare waiting times, prices, carbon emissions, and other related data. A tax on “deadheading” — when cars travel without passengers between drop-offs and pickups — could improve sustainability by incentivizing passengers to pick the closest vehicle.
Advertisement
Drivers would benefit too, since they could migrate more easily from one ride-hailing provider to another without resorting to the clunky juggling of, for example, switching between Uber and Lyft on two different smartphones. Instead of being forced to drive for whichever firm controlled the most customers, they could vote with their feet and work for whoever treated them best.
Uber’s recent move should hence be just the first step of a government-led effort to reimagine urban mobility with integrated digital platforms. When it comes to something as fundamental as transport, cities need not, should not, and cannot afford to pay the price of anarchy.
Carlo Ratti teaches at the department of urban studies and planning at MIT and is a founding partner at the design and innovation office Carlo Ratti Associati.
