Impact of negotiation on subsidy scheme to incentivise the integrated use of metro and ride-hailing services

Although the integration of metro and ride-hailing services is a promising way to handle the last-mile problem, the viability of long-term subsidies funded by municipalities with limited budgets is in doubt. We thus investigate two self-funded subsidy schemes: metro-lead subsidy scheme (MS) and ride-hailing platform-lead subsidy scheme (RS). To this end, an integrated system consisting of a metro operator and a ride-hailing platform is considered, where the participants have access to negotiation. A game-theoretic model is established to capture the interactions among self-interested stakeholders. The results across MS and RS show that bargaining behaviour is always effective in promoting traveller adoption of ‘metro + ride-hailing', but cannot leave both operators better off due to the adverse effect on the ride-hailing platform. Also, bargaining behaviour enables the preferences of the operators for MS and RS to be aligned, which are sensitive to metro coverage.