The Impact of E-Hailing Competition on the Urban Taxi Ecosystem and Governance Strategy from a Rent-Seeking Perspective: The China E-Hailing Platform

Nowadays, the way of Internet travel in China presents diversified development. Rapid expansion in the personal mobile terminal and Internet infrastructure for the Internet travels to the ecosystem of development and evolution. This paper explores the influence of the expansion of the e-hailing ecological community on the urban taxi ecological community, and the problems of profit-seeking, rent-setting, and rent-seeking from the capital behind the e-hailing platform. With entrance into the urban travel ecosystem with ride-hailing platform enterprises and emerging business models, how does (venture) capital cause the change of the urban taxi ecology? Is it essentially the rent-setting and rent-seeking behavior of capital that obtains the market monopoly status of e-hailing? What are the difficulties for governments and the public in regulating rent-seeking in capital and emerging business models? The aim is to explore the new governing strategy of urban taxi ecology. The paper chooses the case of the DiDi e-hailing platform, and performs a study on the utility and indifference curves quantitatively, and constructs a rent-seeking liaison between platform’s entry into the market and the platform’s monopoly. In this paper, the ecological system of the taxi industry is first sorted out, and the community relationship between the traditional cruise taxi industry and the e-hailing industry, and their market supply and demand relationship are clarified. Secondly, from the main theoretical perspective of rent-seeking behavior, this paper analyzes the causes of the rent-setting rent-seeking behavior of e-hailing platform enterprises and the venture capital behind them, and the problems of public power supervision. As the red pack & subsidy market strategy changes the utility (indifference) curve of passengers, the consumption preference of passengers is more inclined to e-hailing. With the expansion of the e-hailing community, the e-hailing platform partly replaces the regulatory role of the government, and venture capital investors as rational-economic individuals, and its agency responsibilities and profit-seeking characteristics naturally form a contradictory pair. The introduction of competition is a means among market policies to break monopoly. Even so, commercial competitors are able to avoid laws or regulations by the means of commercial mergers or through the implementation of variable interest entities control. Governments should therefore seek to participate actively in the governance of such organizations.