The Competition Between Taxi Services and On-Demand Ride-Sharing Services: A Service Quality Perspective
Round 1
Reviewer 1 Report
Comments and Suggestions for AuthorsThe paper effectively addresses the important issue of competition between taxi services and on-demand ride-sharing platforms, employing mathematical (game-theoretical) models of service quality. However, to enhance its contribution, the authors should elucidate the rationale behind the choice of the Stackelberg model over other prevalent options like logit mode choice models commonly used in transport economics.
Furthermore, while the paper presents valuable insights, a more explicit connection between the findings and the broader literature is necessary. The conclusions quoted in Chapter 2 should be revisited and either confirmed, refuted, or expanded upon in Chapter 8.
Lastly, the paper's presentation could be improved by ensuring consistent formatting, such as uniform line spacing and a clearly defined paper type in the heading.
Comments on the Quality of English LanguageThe text requires editing, inlcuding but not limited to English.
Author Response
Dear Editors and reviewers:
Thank you for your precious comments and advice. Those comments are all valuable and very helpful for revising and improving our paper, as well as the important guiding significance to our researches. We have studied comments carefully and have made correction which we hope meet with approval. The main corrections in the paper and the responds to the reviewer’s comments are as flowing:
Response to the reviewer's comments:
Reviewer #1:
Thank you for your summary and suggestions. We really appreciate your efforts in reviewing our manuscript. We have revised the manuscript accordingly. Our point-by-point responses are detailed below.
Comment 1: “To enhance its contribution, the authors should elucidate the rationale behind the choice of the Stackelberg model over other prevalent options like logit mode choice models commonly used in transport economics”
Response1:Thank you for your careful review. The price competition between taxi service and on-demand ride-sharing service considered in this paper is similar to the case in Zhong et al. (2022). Therefore, we also use Stackelberg model over other prevalent options.
References:
Zhong, Y., Yang, T., & Cao, B., et al. (2022). On-demand ride-hailing platforms in competition with the taxi industry: Pricing strategies and government supervision. International Journal of Production Economics, 243, 108301.
Comment 2: “While the paper presents valuable insights, a more explicit connection between the findings and the broader literature is necessary. The conclusions quoted in Chapter 2 should be revisited and either confirmed, refuted, or expanded upon in Chapter 8.”
Response2: Thank you for your careful review. In Chapter 8, we add the comparison between the conclusions we get and the related works, which is shown in red.
“This result is contrast to Zhong et al. (2022), in which suggests the government should encourage competition between platforms and taxi industry.” (Line 892-893)
“The government needs to strengthen supervision on the platform offering high-end service, which is similar to the suggestion in Yang et al. (2022).” (Line897-898)
“Numerical analysis shows that consumer surplus benefits from the improvement of the average service quality, which is similar to Wang et al. (2024).” (Line 910-911)
References :
Zhong, Y., Yang, T., & Cao, B., et al. (2022). On-demand ride-hailing platforms in competition with the taxi industry: Pricing strategies and government supervision. International Journal of Production Economics, 243, 108301
Yang, J., Zhao, D., & Wang, Z., et al. (2022). Impact of regulation on on-demand ride-sharing service: Profit-based target vs demand-based target. Research in Transportation Economics,92,101138.
Wang Z, Zhang Y, & Jia B, et al. (2024). Comparative Analysis of Usage Patterns and Underlying Determinants for Ride-hailing and Traditional Taxi Services: A Chicago Case Study. Transportation Research Part A, 179,103912.
Comment 3:“The paper's presentation could be improved by ensuring consistent formatting, such as uniform line spacing and a clearly defined paper type in the heading”
Response 3: Thank you for your careful review. We apologize for the inconsistent formatting. We revise it and also clearly defined the paper type in the heading.
Author Response File: 
Author Response.docx
Reviewer 2 Report
Comments and Suggestions for AuthorsThe paper presents a topic that is worth to be investigated and it definitively in line with the scope of the journal. However, I think there are some parts that should be expanded, some points that should be clarified and better detailed. Particularly, I recommend reconsidering it after that the following major and minor revisions would be accomplished:
1. I would suggest using an impersonal form in all the manuscript, avoiding sentence like “We summarize the results […]” (line 95) or “We first review the research on the price decision […]” (line 154)
2. In the Introduction Section, please clearly state the added value to the scientific literature of your manuscript.
3. The paper has a strong ‘mathematical imprint’ (e.g., Proposition, Theorem, Corollary, Formulas, etc.), which I appreciate. However, considering the topic of analysis, I would suggest enhancing the policy recommendations in Sections 5, 6, and 7 to make the paper more appealing to planners and policymakers. Additionally, I recommend incorporating some global case studies into your suggestions.
4. The scientific literature referenced in the manuscript seems somewhat centred on Asian studies. Could you please review and include more European and American literature? The topic of traditional taxis versus on-demand services is extensively discussed internationally.
5. Among future research perspectives, I suggest including an analysis of the competition between traditional taxis, on-demand taxis, and aerial on-demand taxis (i.e., Urban Air Mobility - UAM services) from the service quality perspective. This would provide an outlook for future research, considering that UAM services have been shown to compete with traditional ground taxis from the passengers' willingness-to-pay perspective (please refer and cite https://doi.org/10.1016/j.tranpol.2024.03.003).
6. Finally, I think there’s room for improving the interpretation of results and the conclusions. Please mention also the limitations of the proposed methodological approach.
Author Response
Dear Editors and reviewers:
Thank you for your precious comments and advice. Those comments are all valuable and very helpful for revising and improving our paper, as well as the important guiding significance to our researches. We have studied comments carefully and have made correction which we hope meet with approval. The main corrections in the paper and the responds to the reviewer’s comments are as flowing:
Response to the reviewer's comments:
Reviewer #2:
Comment 1: “.I would suggest using an impersonal form in all the manuscript, avoiding sentence like “We summarize the results […]” (line 95) or “We first review the research on the price decision […]” (line 154)”
Response 1:Thank you for your suggestion. We revise all the impersonal form in this manuscript, such as “The results and managerial implications are summarized as follows.” and “Firstly, the research on the price decision of on-demand ride-sharing service is reviewed.”
Comment 2: “In the Introduction Section, please clearly state the added value to the scientific literature of your manuscript.”
Response 2:Thank you for careful review. We add the value of this work to the scientific literature in the Introduction Section.
“For observing the regulatory polices (e.g., regulated pricing, a complete ban, entry limitation) in different countries, several papers focus on designing the regulation policy to achieve the coexistence of taxi service and on-demand ride-sharing service. Li et al. (2019) compared several supervisory measures, including the driving cap, the minimum wage, and the congestion tax, using queuing theory. Tang et al. (2023) built a multi-stage game-theoretic model and compared the effect of regulation policies such as limited the amount of time users could spend online. However, fewer studies have considered that how to achieve the coexistence of on-demand ride-sharing service and taxi service from the perspective of service quality. Moreover, the regulatory policies rarely differ depending on the service type provided by the platform. Thus, this paper attempts to provide insight on how to regulate the on-demand ride-sharing service highlighting the role of service quality and the service type.” (Line 76-87)
Comment 3:“The paper has a strong ‘mathematical imprint’ (e.g., Proposition, Theorem, Corollary, Formulas, etc.), which I appreciate. However, considering the topic of analysis, I would suggest enhancing the policy recommendations in Sections 5, 6, and 7 to make the paper more appealing to planners and policymakers. Additionally, I recommend incorporating some global case studies into your suggestions.”
Response3:Thank you for careful review. We revise the policy recommendations in the discussion parts and add some global case studies into the suggestions, which are shown in red.
“This result is similar to Wang et al. (2024). They argue that both the taxi industry and on-demand ride-sharing service must enhance service quality to remain competitive and efficient.” (Line 610-612)
“Thus, it is more likely that the taxi profit decreased with the entry of on-demand ridesharing service. Based on the survey in Ghana, Sub-Saharan Africa, the emergence of on-demand ride-sharing service brought dramatically decrease in taxi service (Acheampong et al., 2020). Zhong et al. (2022) consider ride-hailing’s low trip prices as the main reason for declining taxi rides. While, the result in this paper provides the new explanation for the decline in taxi service from the service difference between two services. The result once again highlights that the government should be concerned about the difference in service quality in order to achieve the coexistence of two services. The regulation can be proposed to encourage the platform to provide better service. On the one hand, the platform can improve the service quality by providing a more comfortable car or high-quality drivers. On the other hand, the platform can further use the advantages of information technology to match supply and demand accurately and shorten waiting times. Then the two services can be more heterogenous.” (Line 728-740)
“E-hailing taxi service is possible from the technology perspective (Move EU, 2024). In Germany, taxi companies have offered their service online to improve the service quality to face the competition from the on-demand ride-sharing service (Statista,2024). Additionally, the government can promote the cooperation between on-demand ride-sharing service and taxi service to enhance its service responsiveness. DiDi announced that it has reached cooperation with more than 150 taxi enterprises in China. Didi sent orders based on bigdata analysis, improving taxi drivers' income and operating efficiency.” (Line 816-822)
Comment 4:“ The scientific literature referenced in the manuscript seems somewhat centred on Asian studies. Could you please review and include more European and American literature? The topic of traditional taxis versus on-demand services is extensively discussed internationally.”
Response4: Thank you for your carefully review. We add the topic of traditional taxi service versus on-demand services European and American literature, which are shown in red in Section 2.
“Using the user data of on-demand ride-sharing and taxi service in Chicago, Wang et al. (2024) compared the usage patterns for two services and explore the underlying determinants of usage patterns. Cetin and Deakin (2019) took New York and Istanbul as an example to study the impact of on-demand ride-sharing service on the taxi service and provided the suggestion for the regulation of the new service.” (Line 192-196)
“However, Contreras and Paz (2018) focused on the competition between two services within the resort corridor and across the valley in Las Vegas. They found that on-demand ride-sharing service could complements taxi ridership.”(Line 205-207)
References:
Wang Z, Zhang Y, & Jia B, et al. 2024. Comparative Analysis of Usage Patterns and Underlying Determinants for Ride-hailing and Traditional Taxi Services: A Chicago Case Study. Transportation Research Part A, 179,103912.
Cetin, T., & Deakin, E. (2019). Regulation of taxis and the rise of ridesharing. Transport Policy, 76, 149-158.
Contreras, S., & Paz, A. (2018). The effects of ride-hailing companies on the taxicab industry in Las Vegas, Nevada. Transportation Research Part A: Policy and Practice, 115, 63-70.
Comment 5: “Among future research perspectives, I suggest including an analysis of the competition between traditional taxis, on-demand taxis, and aerial on-demand taxis (i.e., Urban Air Mobility - UAM services) from the service quality perspective. This would provide an outlook for future research, considering that UAM services have been shown to compete with traditional ground taxis from the passengers' willingness-to-pay perspective (please refer and cite https://doi.org/10.1016/j.tranpol.2024.03.003).”
Response 8:Thank you for your suggestion. We revise the future study and add the UAM services, which are shown in red in Section 8.
“Firstly, in the nowadays, Urban Air Mobility (UAM) attracts a lot of attention. This new service will bring more competition between it and the existing mobility services such as taxi service and on-demand ride-sharing service. Comparing UAM and taxi service, the service quality such as waiting and boarding time is longer for UAM, but the in-vehicle time is much shorter for UAM (Coppola et al., 2024). Considering the service quality, the competition between Urban Air Mobility, taxi service and on-demand ride-sharing service is unclear. The further study of the competition between these services from the passengers' willingness-to-pay perspective needs to be conduct.” (Line 938-946)
References
Coppola, P., De Fabiis, F., & Silvestri, F. (2024). Urban Air Mobility (UAM): Airport shuttles or city-taxis?. Transport Policy, 150, 24-34.
Comment 6: Finally, I think there’s room for improving the interpretation of results and the conclusions. Please mention also the limitations of the proposed methodological approach.
Response 6:Thank you for your careful review. We improve the interpretation of results and add the limitations of the proposed methodological approach, which are shown in red in Section 8.
“The game theory method is used in this paper to characterize the competition between taxi service and on-demand ride-sharing service. To some extent, the method lacks of the application of the data from the practise. There are other methodologies such as aggression analysis and logit model to conduct studies on the research topic in this paper using data from the real world. This will be another future research we will explore.” (Line 946-951)
Author Response File: Author Response.docx
Reviewer 3 Report
Comments and Suggestions for AuthorsTopic is interesting, but I have the following suggestions and questions.
(1) On-demand ride-sharing service has appeared for a long time. Is it reasonable to model the competition with Stackelberg game? Please explain this in detail.
(2)I think there are too many exogeneous variables in the model. It is better to endogenize some.
(3) Is it possible to model the mixed network effect?
(4) For the positive and negative network effect, which is better for the practical situation.
(5) The format is not consistent.
(6) The logics for the exogeneous variables should be supported with practical argument, which are missed in the current analysis.
(7) Contributions of this paper is not clear, which should be conveyed in contrast to the current literature.
Comments on the Quality of English LanguageFair
Author Response
Dear Editors and reviewers:
Thank you for your precious comments and advice. Those comments are all valuable and very helpful for revising and improving our paper, as well as the important guiding significance to our researches. We have studied comments carefully and have made correction which we hope meet with approval. The main corrections in the paper and the responds to the reviewer’s comments are as flowing:
Response to the reviewer's comments:
Reviewer #3:
Comments1: “On-demand ride-sharing service has appeared for a long time. Is it reasonable to model the competition with Stackelberg game? Please explain this in detail.
Response1:Thank you for your careful review. The price competition between taxi service and on-demand ride-sharing service considered in this paper is similar to the case in Zhong et al. (2022). Therefore, we also use Stackelberg model over other prevalent options.
References:
Zhong, Y., Yang, T., & Cao, B., et al. (2022). On-demand ride-hailing platforms in competition with the taxi industry: Pricing strategies and government supervision. International Journal of Production Economics, 243, 108301.
Comments2: “I think there are too many exogeneous variables in the model. It is better to endogenize some.”
Response2:Thank you for your suggestion. In this paper, we focus on the pricing strategies for taxi service and on-demand ride-sharing service, considering the network effect and the service quality difference. So we set the network effect and service quality as exogeneous variables. The research of network effect is usually regarded the network effect coefficient as the exogeneous variable, such as Wang et al. (2019) and Katz and Shapiro (1985). For the service quality, most papers use waiting time to endogenize the service quality, but the service quality may include multiple factors such as wait time and drivers’ qualification. Moreover, we consider that the target of this paper is to get the pricing strategies for two services and provide the coexistence condition for two services from the service quality perspective. In the future, we may try to endogenize more variable such as service quality.
References:
Wang, S., Chen, H., & Wu, D. (2019). Regulating platform competition in two-sided markets under the O2O era. International Journal of Production Economics, 215, 131-143.
Katz, M.L., & Shapiro, C. (1985). Network externalities, competition, and compatibility. American Economic Review, 75(3), 424-440.
Comments3:Is it possible to model the mixed network effect?
Response 3:Thank you for your suggestion. Most of results of mixed network effect for two services is similar to the results without it and it will make some analytic solutions more complicated. So we did not model the mixed network effect. In addition, in this paper, we consider the demand-side network effect which is different from Wang et al. (2019). In their paper, they take into account the cross-side network effect. They proposed the wage strategy for drivers for competing on-demand ride-sharing platforms. But our work focus on the competition between taxi service and on-demand ride-sharing service. We concern more about the competition between two services in demand side. Therefore, we consider the demand-side network effect.
References:
Wang, S., Chen, H., & Wu, D. (2019). Regulating platform competition in two-sided markets under the O2O era. International Journal of Production Economics, 215, 131-143.
Comments4: “For the positive and negative network effect, which is better for the practical situation.”
Response4:Thank you for your careful review. The positive effect means users’ utility is increasing in the demand. In contrast, the negative network effect means users’ utility is decreasing in the demand. Intuitively, positive effect may benefit riders to some extent. But it may not good for the platform profit considering the joint influence of demand and service price. So it may be ambiguous that whether the positive or the negative network effect is better for the practical situation.
Comments5: “The format is not consistent.”
Response5:Thank you for your careful review. We apologize for the inconsistent format. We revise it in all the manuscript.
Comments6: “The logics for the exogeneous variables should be supported with practical argument, which are missed in the current analysis.”
Response6:Thank you for your careful review. We add the practical argument of the logics for the exogeneous variables, which are shown in red in Section 3.
“On the one hand, considering the taxi driver searching behavior, for example, residential area is the most frequent place for drivers to search for customers (Yang and Guan, 2016). It implies that more riders could attract more drivers to provide service thus reduce the wait times. It will improve the service quality and increase the rider’s utility. On the other hand, if the service supply is relatively stable, more riders using on-demand ride-sharing service at the same time will decrease the service availability. For example, in holiday seasons, more riders on Uber will lead to a long wait time or pay more for rapid service (Uber, 2012). And, it is hard to take a ride in the rush hour in Hong Kong. The waiting time of a ride may be more than 15 min, which effect the riders’ utility significantly (Dotdotnews, 2024). A large number of riders means riders may compete with each other to obtain on-demand ride-sharing service and may increase the wait times. In consequence, the service quality of on-demand ride-sharing service is reduced. ”(Line 278-289 )
References:
Tuan, V. A., Van Truong, N., Tetsuo, S., & An, N. N. (2022). Public transport service quality: Policy prioritization strategy in the importance-performance analysis and the three-factor theory frameworks. Transportation Research Part A: Policy and Practice, 166, 118-134.
Uber. 2012. NYE 2012 Surge. https://www.uber.com/en-GB/newsroom/nye-2012-surge
Yang S., & Guan Hong. (2016). Customer-search destination selection behavior of taxi driver based on the theory of planned behavior. Journal of Transportation Systems Engineering and Information Technology, 16(6), 147.
Dotdotnews. 2024. How hard is it to take a taxi during busy hours in HK? https://english.dotdotnews.com/a/202307/12/AP64ae6c62e4b08eeabfe7730f.html
Comments 7 Contributions of this paper is not clear, which should be conveyed in contrast to the current literature.
Response7:Thank you for your careful review. We add the contributions of this paper in Section 1 and the Section 2, which are shown in red.
“For observing the regulatory polices (e.g., regulated pricing, a complete ban, entry limitation) in different countries, several papers focus on designing the regulation policy to achieve the coexistence of taxi service and on-demand ride-sharing service. Li et al. (2019) compared several supervisory measures, including the driving cap, the minimum wage, and the congestion tax, using queuing theory. Tang et al. (2023) built a multi-stage game-theoretic model and compared the effect of regulation policies such as limited the amount of time users could spend online. However, fewer studies have considered that how to achieve the coexistence of on-demand ride-sharing service and taxi service from the perspective of service quality. Moreover, the regulatory policies rarely differ depending on the service type provided by the platform. Thus, this paper attempts to provide insight on how to regulate the on-demand ride-sharing service highlighting the role of service quality and the service type.” (Line 76-87)
“Different from the above literature, this paper uses a decision model to examine the effects of various on-demand ride-sharing services on the taxi industry and attempt to find out the coexistence condition of two services.” (Line 214-216)
“The effect of the type of on-demand ride-sharing service on the coexistence condition of two services is investigated in this paper, which is different from Li et al. (2019).” (Line 226-228)
. “Similarly, this paper also considers high-end service and low-end service, but investigates the coexistence of two services based on the service quality” ( Line 230-232)
“Despite both our work and Zhong et al. (2022) consider the competition between ride-hailing service and taxi service, this paper focuses on the influence of the service quality and network effect on the coexistence condition.” (Line 235-238)
Thank you for reviewers’ careful review. We really appreciate your efforts in reviewing our manuscript during this unprecedented and challenging time. We wish good health to you, your family, and community. Your careful review has helped to make our study clearer and more comprehensive.
Author Response File: Author Response.docx
Round 2
Reviewer 2 Report
Comments and Suggestions for AuthorsI thank the authors for submitting the revised version of the manuscript which has been improved and have addressed comments and suggestions included in my previous report. I would suggest this paper to be accepted for publication in the Sustainability journal.
Reviewer 3 Report
Comments and Suggestions for Authorsrevision is good
