Arash Asadpour
ABSTRACT
We build a model to study the implications of utilization-based minimum earning regulations of the kind recently enacted by New York City for its ride-hailing providers. We identify the precise conditions under which a utilization-based minimum earnings rule causes marketplace instability, where stability is defined as the ability of platforms to keep wages bounded while maintaining the current flexible (free-entry) work model. We also calibrate our model using publicly available data, showing the limited power of the law to increase earnings within an open marketplace. We argue that affected ride-hailing companies might respond to the law by reducing driver flexibility.
Index Terms
- Minimum Earnings Regulation and the Stability of Marketplaces
Recommendations
Minimum Earnings Regulation and the Stability of Marketplaces
Problem definition: New York City and Seattle recently enacted minimum earnings regulations for ride-hailing providers that are based on their utilization rates. The regulations are intended to deliver minimum earnings while preserving the flexibility of ...
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