How disruptive is a disruption? The association between TNCs and vehicle ownership in urbanizing Indonesia

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How disruptive is a disruption? The association between TNCs and vehicle ownership in urbanizing Indonesia

Widita, Alyas / Diwangkari, Andyan

Highlights • We leverage the staggered TNCs entry into cities and districts in West Java, Indonesia to empirically estimate TNCs’ impact on vehicle ownership per capita using difference-in-differences model. • We find that TNCs arrival led to, on average, a 1.1% reduction in vehicle ownership per capita. • The effect was most pronounced in urban districts and varied according to vehicular types (car or motorcycle).

Abstract The advent of transportation network companies (TNCs) in developing countries has often been touted as one of the most visible disruptive innovation examples. While their emergence is perceived as having substantial effects in reshaping the present and future urban landscape, it remains unclear the extent to which TNCs could reduce per-capita vehicle ownership in the rapidly urbanizing developing world. This study exploits the staggered arrival of the TNCs to quantify their effects on vehicle ownership per capita at the city and district-level in West Java, Indonesia. Results from difference-in-differences models indicate that the arrival of the TNCs is associated with an approximately 1.1% reduction in per capita vehicle ownership. This finding suggests that the emergence of TNCs could have a tractable, albeit modest, impact in altering vehicle growth trajectory, even in rapidly urbanizing Indonesia, where vehicle ownership has grown exponentially.