Online Brown Bag Seminar with Roman Zakharenko

Optimal pricing for free-floating shared vehicles

Speaker
Roman Zakharenko, 
Associate Professor of Economics
International College of Economics and Finance,
National Research University - Higher School of Economics

Abstract: The market of free-floating shared vehicles (SV) has a unique theoretical feature: the key product characteristic, location of a vacant vehicle, is determined by previous customer rather than by the provider. This paper uses recursive economics methods to offer a theoretical model of SV market, with a particular emphasis on spatial inequality of demand. I show that, with optimal pricing, providers can dramatically expand areas of service by including low-density suburban areas. The theoretical model is fitted to unique microdata on SV trips in Moscow. A counterfactual exercise with optimal pricing expands the service area by a factor of four.