Understanding the Effect of an E-Hailing App Subsidy War on Taxicab Operation Zones

Understanding taxicab operation behaviors under various management or market policies (i.e., subsidies) is critical to making informed operating decisions for e-hailing companies and for government surveillance. This paper investigates the change of taxicab operation zones in context of an e-hailing app subsidy war in China, which is an important perspective that reflects changes in taxicab behavior, such as how the operation zones of taxicabs under the e-hailing app subsidy war change and how this change affects their trip distance and cruising time. To investigate this issue, this paper utilizes three indexes to elucidate the change of taxicab operation zones, namely, the repetition ratio of operation zone pairs, the area, and the degree of dispersion in the spatial distribution. A case study using taxicab trajectories during all of the important periods of the e-hailing app subsidy war in Shenzhen, China, was conducted and produced several valuable findings; for example, with respect to taxicabs as a whole, the proportion of habitual operation zone pairs among operation zone pairs in neighboring periods is relatively stable under any subsidy policy, and changes in the operation zones have little effect on changes in the average daily trip distance and average daily cruising time. Four groups of taxicabs divided according to initial change patterns in the operation zones present different change patterns during the subsidy war. By comparing these changes before and after the subsidy war, this paper finds that the subsidy war influences the taxicabs in groups I and II, while it has little influence on the taxicabs in groups III and IV, although all groups were affected during the subsidy war. For the taxicab groups in the period with the highest subsidy, the average daily trip distance and average daily cruising time decreased, whereas, in other periods, they presented different patterns.