Service Price Optimization in Ride-Hailing Company and Its Coordination with Insurance Company by Revenue-Sharing Contract

Document Type : Research Paper

Authors

1 Ph.D. Candidate, School of Industrial Engineering, Iran University of Science and Technology, Tehran, Iran.

2 Professor, School of Industrial Engineering, Iran University of Science and Technology, Tehran, Iran.

3 M.Sc., School of Industrial Engineering, Iran University of Science and Technology, Tehran, Iran.

Abstract

This article proposes a mathematical model to examine service pricing in ride-hailing companies and the relationship between ride-hailing and insurance companies, in which insurance is 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, given the impact of epidemics such as COVID-19 on transportation service prices. The interaction between the ride-hailing and insurance companies is modeled using a Stackelberg game in three scenarios: decentralized, centralized, and a 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.

Keywords

Main Subjects

References

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Advances in Industrial Engineering
Volume 60, Issue 1
June 2026
Pages 93-123

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