Dr. Meng Li, Assistant Professor at Rutgers University

Title: Last-mile Commute: Impact of Bike-sharing on Restaurants

Abstract: Last-mile commute refers to the last leg of people’s travels within a city, after they come off a subway, or a quick trip to the corner shop. This paper studies how bike-sharing, which effectively eases people’s last-mile commute, affect local restaurants’ pricing and quality strategies. Our identification uses a difference-in-differences design by exploiting the temporal and geographical variations in bike-sharing’ entry into different cities. We study 1,083,009 restaurants’ pricing and ratings that span 3 years prior to and after the entry of bike-sharing, and we find that in response to bike-sharing’s entry, restaurants reduce prices by 1.6% and increase service quality by 2%. We also show that such effect is more pronounced for low-rating restaurants whereas high-rating restaurants can even increase price and reduce quality, because bike-sharing removes the geographical barriers that enables restaurants to compete directly in quality and reputation. Last, we show evidence that good restaurants in remote locations can benefit from ride sharing’s entry. The findings suggest that restaurants re-position their strategies when cities are embracing smart transits.