Quantifying Efficiency in Ridesharing Marketplaces


The health of Lyft’s marketplace depends on how riders and drivers are distributed across space and time. Within the complex rideshare space, it is not easy to define typical marketplace concepts like “market efficiency” and “supply-demand balance”. A simple question such as “Do we have enough drivers right now?” has different answers depending on context:

  • Are there enough drivers in the right places to maintain good service levels?
  • Are there enough drivers system-wide, assuming a ride request will be accepted no matter how far away it is?
  • Are there enough to maintain an attractive earning rate?

Each question leads in a different direction. Being able to answer such questions is the interesting (and challenging!) part of operating a healthy two-sided marketplace.



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