Estimation of the Supply Function in the Ride-Sourcing Market: A Case Study of Tabriz City

Document Type : applicative

Authors

1 PhD student of Economics, Faculty of Economics and Management, University of Tabriz, Tabriz, Iran.

2 Professor in Economics, Faculty of Economics and Management, University of Tabriz, Tabriz, Iran

3 Associate Prof. of Economics, Faculty of Economics and Management, University of Tabriz, Tabriz, Iran.

10.30473/jier.2025.74771.1497

Abstract

The development  of information and communication technology (ICT) has led to the emergence of a new type of method of ride-sourcing in urban areas, commonly known as internet taxis. Given the importance of examining the ride-sourcing market (internet taxi market) in today’s digitalized economies, this study investigates the driver behavior in the ride-sourcing market via estimating the case supply function of the city of  Tabriz In this study, the Heckman two-stage model is used to eliminate the sample selection bias caused by the presence of a truncated dependent variable in the supply function estimation.The obtained results show that the variables of age and experience have a positive effect, and the variables of education level and air temperature have a negative effect on the probability of participating in the  ride-sourcing market. Also, the  drivers’ net income has a positive effect on the  level of supply, indicating a high sensitivity of supply to net income. In this study, the inverse Mills ratio variable has also been used in the model estimation. According to the results,  incorporating  this explanatory variable in the supply function corrected the bias error and led to a more accurate estimataton of the supply function.

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References

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Journal of Industrial Economics researches
Volume 9, Issue 31
September 2025
Pages 1-14

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History

  • Receive Date: 01 June 2025
  • Revise Date: 09 July 2025
  • Accept Date: 01 September 2025

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