A profitability comparison between a “one-way” car sharing service and a "modified one-way" car sharing service

FANTOLA, MASSIMO;OLIVO, ALESSANDRO;DEVOTO, ROBERTO;Dìaz Maroto Llorente N.

2017-01-01

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Abstract

The research looks at comparing the different performance offered by two types of one-way car sharing services. In particular, we compare the “traditional” service in which users can return vehicles to a pre-determined permitted parking space to the “modified” service in which the decision of where to return the vehicle to is made at the end of its usage and vehicles can be returned also outside the permitted parking areas. The comparison is based on common and given demand/offer assumptions. The mathematical modelling uses state of the art algorithms that allow us to determine for both types of service the optimal number of personnel to re-position the vehicles in order to maximise profit. In particular, the attractiveness of the two services herewith compared, has been analysed both in terms of overall profitability as well as in terms of maximum number of users. The results show and quantify how the “modified” service, whilst allowing a greater degree of flexibility to users in terms of return locations, causes lower economic returns for the service company and lowers the number of users that can be served. Finally, the model allows us to calculate the required tariff increase necessary to transform a “traditional” service into a “modified” service assuming an inelastic demand curve as well as constant profits for the service company.