“Congestion Effects from Price Incentives: Evidence from an Uber Experiment” (JMP)

Despite the popularity of ride-hailing services, there is mixed empirical evidence on their congestion effects. In this paper, I study the heterogeneous spatial and temporal demand responses relate to congestion from an Uber experiment in Cairo, Egypt. While the cost reduction experiment has a strong volume response at both time and spatial dimensions, riders increase the probability of making trips linked to busy locations but decrease the probability of riding uber during busy hours. Facing a 50% price reduction, the rider has a roughly 2.9 percent higher probability of going to places 10 km/h slower. Conditional on a fixed location pair, the rider has a roughly 2.8 percent higher probability of making trips in an hour that is 10km/h faster. I then translate the volume increase into mobility benefit and congestion cost along the spatial and temporal dimensions. The comparison shows a large reduction in mobility benefits at busy locations during busy hours.