Service price optimization in ride-hailing company and its coordination with insurance company by revenue-sharing contract

Articles in Press

Authors

School of Industrial Engineering, Iran University of Science and Technology

Abstract

This article proposes a mathematical model that examines service price in ride-hailing company and relationship between ride-hailing and insurance companies, where insurance being viewed as a competitive advantage. The ride-hailing company insures its drivers, customers, and cars with the insurance company, ensuring that the insurance company will compensate the affected parties in the event of an accident during travel. This study addresses the importance of hygiene in ride-hailing cars due to the impact of epidemic diseases such as Covid-19 on the price of transportation services. The interaction between the ride-hailing and insurance companies is modeled using a Stackelberg game in three scenarios: decentralized, centralized, and coordination game under revenue-sharing contracts. The ride-hailing company decides on insurance and hygiene-level, while the insurance company determines the base entrance premium to interact with the ride-hailing company. This model allows ride-hailing companies to optimize their profitability and decision-making, and provide safe and reliable services to their customers. The study is validated using information from Lyft. The result shows that the revenue-sharing contract between the ride-hailing company and the insurance company increases the profits of both companies. This article provides a framework for ride-hailing companies to gain a competitive advantage by coordinating with insurance companies and ensuring the safety and hygiene of services.

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Advances in Industrial Engineering

Articles in Press, Accepted Manuscript
Available Online from 17 February 2026

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