Competition for Customer Attention is Creating Oversupply Pockets in US Micromobility

We present analytical and empirical arguments that competition over a nearly homogeneous service forces operators to oversupply scooters in urban centers. First, using deployment and ride data from operator APIs and city transportation departments, as well as telemetry data from one of the top three U.S. operators, we estimate average daily scooter utilization across nine major U.S. cities at 3.9%—half the 7.7% minimum utilization target set by transportation departments. Second, using a parsimonious game-theoretic model, we argue that if riders choose among available scooters roughly at random (e.g., the closest one), then in equilibrium all operators need to inflate their fleet sizes to preserve their market shares. Third, using granular data on riders’ choice sets and choices from Kansas City, MO, we provide evidence that these choices are indeed roughly random. Fourth, using our structurally estimated game-theoretic model, we find that in Kansas City, MO: (i) there is a 406% oversupply of scooters, (ii) the interaction between rider choice and competition accounts for 81% of this oversupply, and (iii) if the transportation department issued one more operator permit, oversupply would increase by an additional 82 pp. We conclude that transportation departments should be frugal with the number of permits they issue, and should welcome the consolidation of the scooter market.