Evaluating the Potential of Cooperative Ridesourcing: A Case Study of Arcade City in Austin, Texas

Digital sharing platforms have expanded in popularity over the past decade as technology has increased connectivity and reduced transaction costs — making sharing assets and services cheaper and easier. However, serious equity, labor, and environmental problems can arise when power is consolidated and held by a small number of platform owners. These owners often use unfair and extractive techniques to benefit themselves and their shareholders as opposed to the platform users and society as a whole. Platform cooperatives are an emerging alternative to more centralized sharing platforms. Platform cooperatives are cooperatively owned, democratically governed platforms that facilitate the sale of goods or exchange of services. The goal of platform cooperatives is to decentralize the power of protocols and platforms to allow users and society at large to benefit from the shifting of transactions to the digital realm.

Although ridesourcing services are a commonly cited possible application for platform cooperatives, at present there are very few organizations operating as ridesourcing cooperatives. In May 2016, Uber and Lyft exited the Austin, Texas market when the city voted for stricter fingerprint background checks for drivers. More than a half dozen other ridesourcing organizations emerged in their absence, including Arcade City (AC) Austin. AC Austin is a decentralized ridesourcing cooperative which serves as a platform for coordinating on-demand rides, deliveries, and other services between requesters and drivers. The group is also one of the only examples in the world of a city-scale cooperative ridesourcing organization serving on-demand rides and requests.

This research project evaluated AC Austin and provided important and novel insights into the benefits and drawbacks of cooperative ridesourcing as compared to more prevalent centralized commercial approaches, such as Lyft and Uber. The research team uncovered how and why this unique operating and governance model has succeeded in Austin. They addressed the following overarching questions as part of this project: (1) What factors are important for sustaining operations and ensuring equitable governance of decentralized cooperative ridesourcing platforms like AC Austin? (2) What are the environmental impacts of AC Austin’s current operations and what are the environmental implications of decentralized transportation cooperatives compared to their more centralized counterparts in general? (3) What policy frameworks and proactive governance approaches can be implemented by both regulators and transportation cooperatives themselves to ensure effective, equitable, and environmentally sustainable operations?

The research team reviewed the history of Arcade City, transportation cooperatives, and platform cooperatives, as well as their best practices. They investigated prominent examples of emerging platform cooperatives and examined the various operating and governance approaches.

The research team conducted an operational analysis. This analysis included metrics such as the number of active drivers and requesters, the average driver response time to trip requests, the average wait time, and trip origin and destination locations, among others.

The research team investigated the governance structure of AC Austin. ​​Topics included conflict resolution mechanisms, driver onboarding, operational change consensus, planned applications of blockchain technologies for governance, moderator appointment, insurance, and other resource pooling options. The benefits and challenges of AC Austin’s current governance model were identified and will inform best practices for this group and others like it as cooperative shared mobility systems scale to more members and markets.

The project included an environmental impact analysis of AC Austin. The researchers collected survey data regarding changes in vehicle ownership, reductions in personal vehicle driving, and substitution of other travel modes, and assessed the change in VMT and GHG emissions due to the availability of AC Austin. They used these findings, and those from other studies, to assess the environmental advantages and disadvantages of decentralized mobility systems compared to more centralized approaches.

Lastly, the project explored the policy and legal implications of Arcade City and other transportation cooperatives. The research team’s analysis included a review of pertinent literature surrounding the policies that may present barriers to AC Austin’s operational model at the city, state, and federal levels. The researchers examined potential policies enacted in other fields that could limit or enable the development of transportation cooperatives in the future. They assessed best practices for organizational policies within cooperatives that could help ensure effective and equitable governance as transportation cooperatives scale to more members and additional markets. The team also examined open data access and privacy considerations of decentralized platforms.