An Investigation Of The Uber Driver Reward System In China - An Application Of A Dynamic Pricing Model

Uber is a prominent example of the sharing economy and a key player in the transportation service market. In this paper, we investigate how Uber adopts a dynamic pricing system in its compensation structure design for driver rewards. A longitudinal and citywide comparison of the Uber driver reward system reveals that Uber reacts to local taxi conditions in China by creating different reward conditions in unique city environments in response to taxi possession rates. The dynamic pricing model embedded in the Uber driver reward system benefits hardworking drivers (particularly during peak periods) and those who provide a friendly and efficient service experience for passengers. In addition, we identify significant benefits introduced by Uber including significantly improvement of driver remuneration and reduction of the taxi plate subscription premium. These findings contribute evidences of the utility of dynamic pricing systems, especially in compensation structure design, as well as positive influences introduced by sharing economy in tackling taxi service market monopoly.