Optimal pricing in ride-share platforms

Abstract

AbstractRide-share platforms are contemporary businesses that match passengers with drivers, unlike taxis that can be hailed from the street. In the literature, the problem of optimizing the operations of such companies is mostly considered in static settings. We use in this paper a dynamic model and propose differential equations to model the evolution of the system. The objective is to maximize the profit during the planning horizon. Using optimal control theory, we determine the optimal rate of change in the ride price rate. An illustrative example along with sensitivity analyses shows the effect of the system parameters on the optimal solution obtained.

Keywords

• ride-sharing
• optimal control
• optimal pricing