Dynamic Pricing in Shared Mobility on Demand Service and its Social Impacts

TitleDynamic Pricing in Shared Mobility on Demand Service and its Social Impacts
Publication TypeConference Paper
Year of Publication2018
AuthorsHan Qiu, Ruimin Li, Jinhua Zhao
Conference NameTransportation Research Board 97th Annual Meeting
Conference LocationWashington, D.C.

The authors consider a daily-level profit maximization of a shared mobility on-demand (MoD) service with request-level control. The authors use discrete choice models to describe traveler behavior, apply the assortment and price optimization framework to model the request-level dynamics, and leverage insights from dynamic programming to develop daily-level optimization problem. The authors solve this problem by designing parametric rollout policy and utilizing Covariance Matrix Adaptation Evolution Strategy (CMA-ES) to search for optimal parameter. The authors evaluate their algorithm with a case study in Langfang, China. The authors develop a simulation system for both the MoD service operations and the city transportation dynamics, and design scenarios with varying supply size, demand size, congestion level, and fare structure. In this case study, the optimal pricing strategy generates considerably more profit than basic strategies (those without assortment or dynamic pricing) and myopic strategies (dynamic pricing at each request level), but it increases the congestion level and reduces the capacity in the transportation system.