The Integration-Competition Dilemma: An Equilibrium Analysis of Intercity Ride-Pooling [Link]

Intercity ride-pooling is emerging as a transformative force in the rapidly growing short-to-medium-haul mobility market. To resolve the integration-competition dilemma—whether to fold this novel service into incumbent bus operations or introduce it through a decentralized entrant—we develop a multi-stage game-theoretic framework. We compare three distinct implementation schemes: bus-led integration (M 1), bus-TNC competition (M 2), and a bus-TNC alliance (M 3). To the best of our knowledge, this is among the first equilibrium frameworks to unify these pathways under a common standard by endogenizing operators’ capacity and pricing decisions alongside travelers’ mode choices. We find that high operational costs force a strictly cost-oriented capacity strategy across all schemes, yet this yields a stark structural reversal in deployment. When external alternative modes are strong, integration deploys the broadest ride-pooling coverage; however, when alternatives weaken and services compete directly, the integrated operator deliberately restricts ride-pooling to shield the mass-transit network from cannibalization. Decentralization severs this protective link, yet the entrant’s market share remains structurally capped below 50%, positioning ride-pooling fundamentally as a complement to, rather than a replacement for, mass transit. From a welfare perspective, unified planning (M 1) generally secures the social optimum by curbing over-investment. Unmanaged competition (M 2) maximizes passenger surplus when costs are low; however, under high costs, uncoordinated expansion diverts bus ridership and severely erodes the Mohring-type scale economies of mass transit (e.g., degrading service quality and reducing frequencies). This backfires on the traveling public, with the total traveler-cost increase remaining strictly below the supremum of 7.14%. Finally, the alliance (M 3) can surpass integration if ride-pooling becomes extremely cheap to operate or if the TNC’s technology bypasses prohibitive launch costs. However, this cooperation breaks down in intermediate-penetration scenarios where the bus operator’s demand for compensation exceeds the TNC’s valuation of the synergy. These insights provide a conditional strategic roadmap for practitioners and regulators navigating the intercity mobility transition.