Managing ride-sourcing drivers at transportation terminals: a lottery-based queueing approach

Abstract: Problem definition: Transportation terminals such as airports often experience persistent oversupply of idle ride-sourcing drivers, resulting in long driver waiting times and inducing externalities such as curbside congestion. While platforms now employ virtual queues with control levers like dynamic pricing, information provision, and direct admission control to manage this issue, all existing levers involve significant trade-offs and side effects. This limitation highlights the need for an alternative management approach. Methodology/results: We develop a queueing-theoretic framework to model ride-sourcing operations at terminals and propose a novel lottery-based control mechanism for the virtual queue. This non-monetary strategy works by probabilistically assigning a driver's entry position. By directly influencing their expected waiting time, the mechanism in turn shapes their decision to join the queue. We reformulate the resulting infinite-dimensional, non-smooth optimization into a tractable bi-level program by leveraging the threshold structure of the equilibrium. Theoretically, we prove that the lottery mechanism can achieve higher or equal social welfare than FIFO-queue-based dynamic pricing. Numerical experiments in unconstrained markets show that in profit maximization, our approach only narrowly trails dynamic pricing and significantly outperforms static pricing. Furthermore, it is shown that under commission fee caps, the lottery mechanism can surpass dynamic pricing in profitability. Implications: This study introduces a new, non-monetary lever for managing idle ride-sourcing drivers at transportation terminals. By aligning operational practices with queue-based dynamics, the proposed lottery mechanism offers a robust and implementable alternative to pricing-based approaches, with advantages in both unconstrained and regulated markets.