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Research proposes 'negative price' strategy to better manage bike sharing systems

Dr Meng Meng suggests a new way to manage the supply of bikes, using financial incentives to convince users to cycle from areas to high supply to low

A novel pricing strategy to better manage bike sharing systems has been developed by Dr Meng Meng and her international collaborators from the Nanyang Technological University, Singapore. With bike-sharing on the rise during the pandemic as a low-risk mode of transport, some cities like Beijing have experienced an increase by up to 150% in bike-share use. Meng’s research aims to balance the supply and demand of bikes by introducing a dynamic pricing strategy with negative prices into bike sharing systems.

Due to its very common one-way usage, public bike sharing services inherently have the issue of imbalanced distribution of bikes over time and space. For example, most users cycle from residential areas to the nearest transit stations in the morning. Subsequently, bikes in residential areas are quickly out of stock, with users arriving later not being able to access available bikes. As a result, the level of user satisfaction for public bike sharing service can drop significantly. A balanced distribution of bikes means that the bikes are located at the positions which can ensure the reachability of the bikes to users. Operators usually utilise dedicated relocation vehicles (e.g. light trucks) to move the bikes from an area with oversupply to those suffering undersupply. Restricted by the limited available resources (such as manpower, budget, vehicle capacity) and high relocation cost (estimated at about £2.2 per bike), relocation vehicles can only partially solve the bike repositioning problem for bike sharing service, especially in dockless bike sharing systems.

In a paper published by the Transportation Research: Part B journal, Meng proposes a dynamic pricing strategy to influence the users’ cycling behaviour in ways that lead to a more balanced relocation of bikes in the system. Normally, users are required to pay a certain price to the operator to use a bike. The novelty in Meng’s approach is the adoption of radical negative prices (and other monetary incentives) in undersupplied areas, wherein the ratio of the available bikes to the real-time demand is below certain threshold value. In other words, users receive monetary awards when cycling from areas with bike oversupply to those with undersupply. With such a negative pricing scheme, existing bike users are incentivised to adjust their routing choices; meanwhile, new users might be attracted from their original travel modes to use bikes. Both behaviours will contribute to the objective of achieving a more balanced bike relocation.

As the study’s results demonstrate, free price and negative price can both attract more users due to the low cost compared to a positive price. Negative price can guide the users to change their modes or paths to achieve a more balanced bike relocation. In terms of operation performance, negative price performs better than free price and positive price in both user attraction and fare revenue. As a result, the proposed strategy could be one of the possible ways to ensure the sustainable development of bike sharing systems.