Private market design

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Actually, I could have easily entitled this post: socialist market design. When I was in school a teacher who was of the very left persuasion (his surname was actually Green) explained socialism to me. He argued that you wouldn’t own a bike. You’d just pick one up, use it and leave it. That struck me as possible but what would happen if everyone wanted to go the same way and didn’t want to come back? He had no answer for that.

I thought of that conversation today when I read about SoBi. This is a company that intends to have a pool of bikes that anyone who is a member of the collective can use. They will use iPhones and GPS to tell you where bikes are but they can be picked up and left anywhere. It is like a Zipcar except that you don’t have to return the bike to where you started. In other words, surely it will suffer from the problem I identified with socialism.

Well apparently not. The SoBi people have thought about it and have decided that the answer to the socialism coordination problem is to design a market. They will monitor and learn about travel patterns and inventory. This will then be complemented by an obligation on the last user of a bike at the end of the day to return it to some designated hub. If they don’t do this they pay $2. But the best part is that all this information will be available in the evening and so for bikes that are out of place there will be a $2 bounty to get them back to where they belong. It is hard to know if that price is right or not but at least they are thinking about these things and how to essentially create a market. This is a practice at some supermarkets with trolleys. The nice thing is that it taxes the selfish and rewards the selfless; if you want to put it in those terms.

2 Responses to "Private market design"
  1. This sounds interesting.  But why charge the last user?  How will a user know if they are last?  Why not just absorb the cost of collection, or spread it across all users.

  2. Hi, my daughter and son-in-law used a scheme like this in Madison in Wisconsin and never had any problems. They loved it. There was also a car version which also worked well. It is possible for someone to shuffle them around if need be.

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