Toward identifying the critical mass in spatial two-sided markets

Abstract

Unlike their nonspatial counterparts, spatial multi-sided platforms are matchmaking platforms with an additional layer of complexity: their customers expect to meet in space, not only virtually. This additional challenge will be studied in this paper in the context of a two-sided ride-sharing platform, which serves drivers and passengers. As with any two-sided platform, there is an interdependence between both groups of customers: More drivers are more attractive for passengers, and vice versa. This interdependence creates the old chicken-and-egg problem, only that here drivers and passengers need to be matched not for a virtual transaction, but by their ability to meet physically and travel..