Stochastic Equilibrium in Hybrid Taxi Markets: Coupling E-hailing and Street-hailing under Information Friction and Bounded Rationality

Stochastic Equilibrium in Hybrid Taxi Markets: Coupling E-hailing and Street-hailing under Information Friction and Bounded Rationality | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article Stochastic Equilibrium in Hybrid Taxi Markets: Coupling E-hailing and Street-hailing under Information Friction and Bounded Rationality Wenjun Hu, ZHANG Bingda This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-8760694/v1 This work is licensed under a CC BY 4.0 License Status: Under Review Version 1 posted 8 You are reading this latest preprint version Abstract The evolution of mobile internet technology has transformed urban taxi systems into hybrid markets where traditional street-hailing and app-based e-hailing coexist. However, existing literature often relies on assumptions of perfect rationality and perfect information, overlooking the perception errors and bounded rationality of drivers in dynamic search processes. This paper proposes a stochastic equilibrium model for hybrid taxi markets that explicitly incorporates information frictions and driver bounded rationality. First, we establish a coupled dual-market framework: the street-hailing market is characterized by a modified Cobb-Douglas matching function to capture spatial search frictions, while the e-hailing market is modeled using queueing theory and digital matching mechanisms. Second, we introduce a Logit-based stochastic perception model to endogenize drivers' dynamic choices between zones and operation modes (cruising vs. e-hailing), reflecting suboptimal decisions caused by information asymmetry. Finally, numerical simulations are conducted on a standard test network to investigate equilibrium properties. The results reveal that the introduction of e-hailing does not guarantee system-wide efficiency gains; intense competition from e-hailing can exacerbate search frictions in the street-hailing market through a "cannibalization effect." Furthermore, the study demonstrates diminishing marginal returns to information transparency, where excessive information availability may trigger "herding behavior" and localized congestion. These findings provide novel theoretical insights for regulation and pricing strategies in mixed-operation taxi ecosystems. Hybrid taxi market Stochastic user equilibrium (SUE) E-hailing Bounded rationality Information friction Two-sided matching Full Text Additional Declarations No competing interests reported. Cite Share Download PDF Status: Under Review Version 1 posted Reviews received at journal 10 May, 2026 Reviewers agreed at journal 18 Mar, 2026 Reviewers agreed at journal 18 Mar, 2026 Reviewers agreed at journal 18 Mar, 2026 Reviewers invited by journal 18 Mar, 2026 Editor assigned by journal 04 Feb, 2026 Submission checks completed at journal 04 Feb, 2026 First submitted to journal 02 Feb, 2026 You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. Our growing team is made up of researchers and industry professionals working together to solve the most critical problems facing scientific publishing. Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-8760694","acceptedTermsAndConditions":true,"allowDirectSubmit":false,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":608559010,"identity":"eba96804-0e2e-4a62-a8be-1e6556348e0a","order_by":0,"name":"Wenjun Hu","email":"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAZAAAAAyAQMAAABI0h/eAAAABlBMVEX///8AAABVwtN+AAAACXBIWXMAAA7EAAAOxAGVKw4bAAAA80lEQVRIiWNgGAWjYBACAzDJw8DAB6IfMNjw8PM3EKmFDUQnMKTJSM44QIwWBriWwzYGDQn4tZhL5Bg+LpA5nMfG3mP4ILHtPI8BwwHGDx9zcGuxnJFjbDyD53AxG88ZY4PEtts85swNzJIzt+Fx2I3cbdI8PIcT2yTS0iRAWiwbDrAx8+LXsv03VEv6j8S2czwGBxIIatnGDNGSfIwhse0AEVrOvP8MdFh6YhvP4cMSCeeSeSRnHGzG75fjaYmfeXusE/vZGxs/fCizs+fnbz744SMeLWDA2ANjgGOHsYGAehD4AWP8IULxKBgFo2AUjDgAAJrMUULwdNq8AAAAAElFTkSuQmCC","orcid":"","institution":"Shanghai Zhongqiao Vocational and Technical University","correspondingAuthor":true,"prefix":"","firstName":"Wenjun","middleName":"","lastName":"Hu","suffix":""},{"id":608559011,"identity":"5d1e61ea-d5a6-4bfa-93cf-9618d392b950","order_by":1,"name":"ZHANG Bingda","email":"","orcid":"","institution":"Shanghai Zhongqiao Vocational and Technical University","correspondingAuthor":false,"prefix":"","firstName":"ZHANG","middleName":"","lastName":"Bingda","suffix":""}],"badges":[],"createdAt":"2026-02-02 05:23:21","currentVersionCode":1,"declarations":"","doi":"10.21203/rs.3.rs-8760694/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-8760694/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":105564331,"identity":"4714fdf2-8c41-43e8-a440-1fb1fa0752ce","added_by":"auto","created_at":"2026-03-27 12:49:17","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":523020,"visible":true,"origin":"","legend":"","description":"","filename":"StochasticEquilibriuminHybridTaxiMarketsCouplingEhailingandStreethailingunderInformationFrictionandBoundedRationality.pdf","url":"https://assets-eu.researchsquare.com/files/rs-8760694/v1_covered_937720e7-8545-4395-8325-90af6443c247.pdf"}],"financialInterests":"No competing interests reported.","formattedTitle":"Stochastic Equilibrium in Hybrid Taxi Markets: Coupling E-hailing and Street-hailing under Information Friction and Bounded Rationality","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":false,"hideJournal":false,"highlight":"","institution":"","isAcceptedByJournal":false,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"networks-and-spatial-economics","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":false,"externalIdentity":"nets","sideBox":"Learn more about [Networks and Spatial Economics](http://link.springer.com/journal/11067)","snPcode":"11067","submissionUrl":"https://submission.nature.com/new-submission/11067/3","title":"Networks and Spatial Economics","twitterHandle":"","acdcEnabled":true,"dfaEnabled":true,"editorialSystem":"em","reportingPortfolio":"Springer Hybrid","inReviewEnabled":true,"inReviewRevisionsEnabled":false},"keywords":"Hybrid taxi market, Stochastic user equilibrium (SUE), E-hailing, Bounded rationality, Information friction, Two-sided matching","lastPublishedDoi":"10.21203/rs.3.rs-8760694/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-8760694/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003eThe evolution of mobile internet technology has transformed urban taxi systems into hybrid markets where traditional street-hailing and app-based e-hailing coexist. However, existing literature often relies on assumptions of perfect rationality and perfect information, overlooking the perception errors and bounded rationality of drivers in dynamic search processes. This paper proposes a stochastic equilibrium model for hybrid taxi markets that explicitly incorporates information frictions and driver bounded rationality. First, we establish a coupled dual-market framework: the street-hailing market is characterized by a modified Cobb-Douglas matching function to capture spatial search frictions, while the e-hailing market is modeled using queueing theory and digital matching mechanisms. Second, we introduce a Logit-based stochastic perception model to endogenize drivers' dynamic choices between zones and operation modes (cruising vs. e-hailing), reflecting suboptimal decisions caused by information asymmetry. Finally, numerical simulations are conducted on a standard test network to investigate equilibrium properties. The results reveal that the introduction of e-hailing does not guarantee system-wide efficiency gains; intense competition from e-hailing can exacerbate search frictions in the street-hailing market through a \"cannibalization effect.\" Furthermore, the study demonstrates diminishing marginal returns to information transparency, where excessive information availability may trigger \"herding behavior\" and localized congestion. 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