Abstract
Fleets of ridesharing companies, such as Uber and Lyft, are providing an increasing share of passenger travel. Autonomous vehicles will likely only magnify this trend. We analyze the welfare effects of the transition from a decentralized regime, in which travelers are atomistic and do not internalize the congestion externality, to a centralized regime, where travelers are supplied by a monopolist’s fleet. The monopolist can sort travelers across routes based on their congestion disutility, and ration them. A centralized regime is always welfare-reducing when the monopolist chooses not to ration travelers. We then characterize optimal road taxes throughout the transition.