Abstract:

The proliferation of ride-hailing platforms has transformed urban mobility by offering convenient travel solutions and generating widespread employment opportunities. As the industry evolves， the focus is gradually shifting toward sustainable development， with driver welfare emerging as a critical concern. An increasing number of platforms recognize that prioritizing driver welfare is not only a matter of corporate social responsibility but also essential for their long-term sustainable development. While prior research has examined the social responsibilities of ride-hailing platforms， there is a lack of studies investigating the platform’s optimal operational decisions when driver welfare is explicitly considered， as well as the impact of such considerations on market equilibrium. This gap is addressed by studying the optimal decisions of a socially responsible ride-hailing platform that operates with a mixed objective： maximizing profit while enhancing driver welfare. The platform determines both the wage paid to drivers and the fare charged to passengers， and it facilitates the matching of available drivers with passenger ride requests. Three widely used pricing strategies are examined： （i） two-sided pricing， where the platform determines the passenger fare and driver wage separately； （ii） fixed commission， where the platform pays drivers a fixed percentage of the fare； and （iii） minimum wage， where drivers receive guaranteed minimum earnings. By studying the platform’s optimal pricing and wage decisions under each strategy， how different levels of concern for driver welfare influence the platform’s decisions and market outcomes is analyzed， including platform profit， driver welfare， and passenger welfare. Using the two-sided pricing strategy as a benchmark， a comparative analysis of the fixed commission and minimum wage strategies is conducted through numerical experiments. The analysis yields several important results. Under the two-sided pricing strategy， the platform can achieve a perfect matching between supply and demand. When driver welfare becomes a higher priority， the platform tends to respond by increasing per-trip wages， thereby directly improving driver earnings. Under either the fixed commission or minimum wage strategies， there may be an oversupply equilibrium in the market. When the emphasis on driver welfare increases， the platform might reduce service prices to boost driver utilization rates， thereby indirectly enhancing drivers’ expected earnings. Importantly， across all pricing strategies， a higher emphasis on driver welfare not only leads to improvements in driver welfare， but also increases passenger welfare. Moreover， platforms can achieve substantial improvements in driver welfare with only marginal reductions in profit. Valuable insights into how ride-hailing platforms can balance profitability and social responsibility are provided. The findings can also inform policymakers in designing regulations that promote both the financial sustainability of ride-hailing platforms and drivers’ well-being.

Key words: platform economy, pricing strategies, corporate social responsibility, driver welfare