On the service differentiation for parking sharing

Abstract

This paper models and optimizes a two-sided market of shared parking where the parking sharing platform rents spare parking spaces from owners and provides them to parkers. Different parkers may derive a different utility or benefit from renting and using a parking space from the platform and their willingness-to-pay for the parking sharing service may differ. In this context, we consider that the platform can provide differentiated services to parkers, i.e., priority and normal services. The priority service will secure the rights to be matched with the parking supplies firstly, but may involve a higher service price. We model the parking supply–demand equilibrium for such a two-sided market with differentiated services and compare it against that under single-type (homogeneous) service. We also analyze how the supply–demand equilibrium varies with the platform’s pricing strategies (service prices and rent paid to parking owners). Then, we discuss and compare the parking sharing platform’s pricing strategies under different economic objectives (i.e., maximize net revenue or social benefit) and under different service structures (i.e., single-type service or differentiated services). We found that differentiated services can help improve platform revenue and social welfare.