Operations on an on-demand ride service system with express and limousine

Motivated by Uber's and DiDi's differentiated services providing, in this paper we propose an analytical model to investigate the operating strategies of an on-demand ride service system for coordinating express and limousine services. It is found that the customer preference for express over limousine plays an important role in the model solutions. When the degree of the preference is lower than a certain criterion, the express service should be terminated; otherwise, both express and limousine services should coexist, with more (fewer) vehicles classified as express when customer demand (driver supply) increases. Under certain conditions, improving the quality of express service benefits both customers and drivers, while leads to an increase in demand for express but a decrease in demand for limousine. These insights would help in a better operation of ride service systems, and provide valuable references for other peer-to-peer markets such as Turo, eBay, Uber, and Airbnb.