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In this paper, game theory method was adopted to investigate the effect of introducing the online car-hailing service as a new trip mode, the strategic interactive relationship between the online car-hailing service and the incumbent (taxi). The incumbent adjusts the trip cost and take different strategies to cope with the situation whether potential entrant enters (online car-hailing service) the market or not. Assumed that the users select the trip mode based on the Value of Time (VOT) function to calculate the demand equilibrium under the given demand. Based on the two-stage game model, the market equilibrium of different strategies were calculated, the profits of trip modes and the total social cost in equilibrium status were used to evaluate the effects of the strategies. Finally, a case study integrated with the practical data was put forward. The results show that, the total social cost reduces after introducing the car-hailing service to the market, although it brings down the profits of taxis. Therefore, a rational development of car-hailing service is economically feasible. Copyright © 2019 by Science Press.
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