Nat Hazards (2018) 91:611–633

https://doi.org/10.1007/s11069-017-3146-2

ORIGINAL PAPER

Enhancing the development of sharing economy

to mitigate the carbon emission: a case study of online
ride‑hailing development in China

Guowei Zhu1 · Hongshan Li1 · Li Zhou1 

Received: 6 September 2017 / Accepted: 15 December 2017 / Published online: 26 December 2017
© Springer Science+Business Media B.V., part of Springer Nature 2017

Abstract  The rapid development of online ride-hailing sharing economic platform pro-
vided an efficient way to mitigate the carbon emission of modern traffic in China. However,
its development was blocked by the social management system whose update is relatively
slow. How to resolve the conflict between the new economic paradigm development under
the technology empowerment and the old public administration system and effectively
solve the new economic and social problems it brought by are the major challenges for the
healthy and sustainable development of this type of sharing economy. To shed light on the
solutions to such conflict, the present paper conducts a case study on China’s largest online
ride-hailing platform ‘Didi Chuxing’. The results indicate that the separation of ownership
and use rights following the sharing economy brings a new approach to the efficient use
of resources. The development of Didi displays a bottom-up policy innovation and insti-
tutional change. The path choice of enterprise development will affect its acquisition of
legitimacy to a great extent. In this mobile Internet era, the public plays a critical role in
shaping the new policy.

Keywords  Carbon emission · Sharing economy · Online ride-hailing · Technology

empowerment · Public policy

1 Introduction

China has long been acknowledged as the top carbon emitters in the world (Zhang and
Hao 2015). In 2016, China accounted for 27.3% of the whole world’s carbon emis-
sion, which decreased 0.7% in comparison with 2015 (BP 2017). In recent years, the
rapid development of the sharing economy has exerted a positive impact on mitigat-
ing the carbon emission, thus causing widespread public concern (Airbnb 2014; Belk

* Li Zhou
lizhou_ibs@hnu.edu.cn
1
Department of Marketing, Business School of Hunan University, Changsha 410082, Hunan, China

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2014; Dall Pizzol et  al. 2017). This new consumption pattern meets people’s material
demands, maximises the utility of social resources at low cost, changes connection and
cooperation between people with new technical means, and thus promotes the crea-
tive transformation of society and the development of a new economy (China National
Bureau of Statistics 2015). The development of the sharing economy has benefited from
the pursuit of better value delivery in the supply chain in recent years (Bucher et  al.
2016; Gansky 2010), the mitigation of adverse effects on ecology (Schor and Fitzmau-
rice 2015), technological progress and the change of consumers’ attitudes towards prod-
uct ownership (Belk 2007; Botsman and Rogers 2010).
China has a large population, which makes the endowment of resources relatively insuf-
ficient; thus, the bearing capacity of the environment is limited (Cheng et al. 2016). China’s
total urban passenger transport volume is 37.4 billion, with highway passenger transport
accounting for 33.9 billion, along with 9.3 million taxis with an annual passenger transport
volume of 1.2 billion (China National Bureau of Statistics 2016). The growth of public
transport resources in recent years has been relatively slow, while, in contrast, the growth
of the urban population is obvious, leading to the problem that transportation demand can-
not be met. On the other hand, with the increase in the income level of residents, the num-
ber of cars a household owns and the number of households that owns cars have increased
significantly. According to China’s Traffic Management Bureau of Ministry of Public
Security, there are more than 124 million private cars in China, among which more than
22 million are idle cars (People’s Daily 2016). This has directly led to urban environmental
problems, such as air pollution and traffic congestion.
Consequently, China’s online ride-hailing sharing economic platform has developed
rapidly since its emergence. With the support of the mobile Internet, these platforms elimi-
nated information asymmetry, eased the serious imbalance between supply and demand
during peak times, and met people’s demands for high quality and convenient travel by
integrating transportation resources, such as socially idle vehicles, car space and driving
skills (Castel and Friedberg 2010). The emergence of online ride-hailing platforms greatly
reduced waste in resources and energy and effectively reduced carbon emissions (Martin
et al. 2010; Martin and Shaheen 2011; Shaheen and Cohen 2013).
Along with the development of online ride-hailing platforms, there arose some questions
and challenges. For example, the online ride-hailing software made it more difficult for
middle-aged and aged people, who are not familiar with the use of smart phones, to take a
taxi. Moreover, when it came to integrating social resources, it was found that online ride-
hailing violated the existing traffic regulations because livery cab licences were required.
At the same time, due to the compression of the profit space for both taxi drivers and taxi
companies, some violent boycotts by taxi drivers and taxi companies occurred. As a form
of sharing economy in the field of public travel, online ride-hailing platforms exist in many
countries, such as Uber and Lyft in the United States, Hailo in Britain. (Liu and Xia 2016).
In the face of the sharing economy’s development, governments in different countries have
shown different attitudes (Ma et al. 2016). For instance, in the United States, even different
states have different attitudes: 50% of the states have begun to develop new regulations to
manage this platform, 40% of the states still adopt the current law, and the remaining 10%
of states forbid it completely. Britain and South Korea took the most positive and active
attitude towards this sharing economy. They formulated a number of development plans;
South Korea even directly provided certain enterprises with financial assistance and helped
to publicise them. In Canada, China and other countries where the sharing economy started
fairly late, the old regulations were still maintained, and those countries are still making
efforts to establish their own proper regulations.

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Nat Hazards (2018) 91:611–633 613

The development of information technology such as the Internet, cloud computing and
big data has not only changed the way people communicate, but also changed people’s
consumption habits and attitudes (Kang et al. 2016). Technology’s development provides
entrepreneurs and enterprises with more opportunities. However, along with the rapid
development of the sharing economy, supported by information technology, its business
model and enterprise development were blocked by the social management system, whose
update was relatively slow. Therefore, resolving the conflict between the new economy
supported by new technology and the old administration system is a major challenge for
the healthy and rapid development of a sharing economy.
Currently, China’s online ride-hailing platform ‘Didi Chuxing’ (hereafter ‘Didi’) is the
world’s largest one-stop mobile travel platform. In 2015, its annual order volume reached
143 million, with 300 million passengers and over 10 million drivers, and its market share
in China has been over 80%.1 From the perspective of institutional innovation and corpo-
rate legitimacy, the current paper chooses Didi as a case study and attempts to answer the
following questions: (1) what restrictions and constraints were there in Didi’s development
process? (2) What did Didi do to deal with and influence government behaviour when fac-
ing pressure from rules and regulations? (3) What changes have taken place in society, and
how have they influenced the game process between Didi and the government? (4) What
should be done for the old system to adapt to the development of new technology?

2 Research method

2.1 Research methodology

Since the purpose of this study is to reveal the evolutionary process of policy, it is proper
to adopt the ‘analytical induction’ method, which utilises case studies to induct theories,
to analyse this problem (Yin 2013). Compared with case study involving multiple cases,
the adopted single case study method is mainly suitable for typical, representative cases,
especially for a longitudinal study involving the same case at different times (Bucher et al.
2016). This paper mainly explores the evolutionary process of the legitimacy of the new
sharing type of ventures, and how to resolve conflicts among the interests of the different
subjects involved. Since this study belongs to the longitudinal study type, which pays much
attention to process and details, a deep analysis and comparison of the gaming process
between enterprises and the government, as well as society at different stages, are required
to explore the evolution law behind it. As the world’s largest one-stop mobile travel plat-
form, Didi has a relatively complete evolutionary process, and it has been subject to many
concerns and studies, making it suitable as a single case study.

2.2 Case selection

The online ride-hailing platform Didi was chosen as the case study object. Didi is an online
ride-hailing software application developed by Small Orange Science and Technology
Ltd. in Beijing. Its core purpose is to quickly match passenger information and vehicle

1
  The user research report of Chinese online ride-hailing service in 2015. http​://www.ires​earc​h.com.cn/repo​
rt/2502​.html​. Accessed on 4th December 2016.

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information with the support of Internet technology and big data. By resolving information
asymmetry between drivers and passengers, this platform effectively reduced the difficulty
of taking a taxi traditionally. Reasons for choosing Didi were as follows: (1) the case com-
pany is a successful new venture in the Internet + traffic field, and it has a market share
of over 90% in domestic China, which makes it representative in this industry. (2) Since
the mobile travel industry involves a large number of stakeholders, the competition game
between the sharing economic enterprises and the stakeholders has shown significant evo-
lutionary progress, regarding how to balance the interests of many stakeholders and at the
same time maintain development. (3) It is a very representative enterprise. Didi typically
reflects such characteristics of a sharing economy as the reuse of idle resources, shared
use rights and trust-based companies (Eisenhardt 1991). (4) Didi has relatively complete
historical data, which provides comprehensive material for exploring its evolution law
systematically.

2.3 Case overview

When receiving the 1-click order from passengers, who input their place of departure and
their destination using their phone app, Didi will distribute this order intelligently through
background servers. Having accepted an order, the driver will arrive at the designated place
to pick up the passenger. An electronic settlement will be made after the two sides reach
their destination, and passengers can evaluate the service and enquire about their orders
through their phone app following the trip.
Launched in September 2012, Didi started with taxi services and focused on the high
frequency and rigid demand problems of public travel so as to improve the efficiency
of taking a taxi. In January 2014, Didi obtained $100 million of financing from funders
including Tencent, and it then experienced a 3-month subsidy war with its competitor
‘Kuaidi Dache’. This subsidy war established the acceptance of online ride-hailing software
and promoted passengers’ habits in using it. Meanwhile, Didi accumulated a large number
of users and beat Kuaidi at one stroke to become the no. 1 in its field. Didi then focused
their attention on the incremental market and adopted a commercial exploration model. In
September 2014, Didi’s Special Car emerged, which aimed to provide differentiated and
high-end services. Through cooperation with car rental companies, Didi unified their cars
and service standards to meet the needs of the high-end population. However, due to the
government’s control over the number of taxis, there was still a significant gap in meet-
ing taxi demand during peak hours. In May 2015, ‘Didi Express’ emerged. It introduced
idle private cars into the market, which not only eased the mismatch between demand and
supply, but also practised the core value of a sharing economy, releasing the idle cars and
human resources, and improving the resource configuration rate. In June 2015, ‘Didi ride
sharing’ was launched. It greatly improved the seat utilisation rate of vehicles in a single
trip and eased traffic jams by connecting those passengers and drivers who are willing to
travel in a group. In July 2015, ‘Didi designated driving’ appeared, which further broad-
ened car-using circumstances. It mainly provided services for business travel, long-distance
travel and combating drink-driving. In the second half of 2015, Didi developed new busi-
nesses such as bus and test-driving services by taking advantage of the big data that the
public travel platform accumulated early. It signed strategic cooperation agreements with
many enterprises and developed in the direction of being a platform ecosystem.
Since its launch on 9 September 2012, Didi has covered multiple business opportunities
such as taxis, special cars, express cars, ride sharing, designated driving, buses and test

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 Nat Hazards (2018) 91:611–633

Table 1  Business and related business of Didi

Time of appearance Service Purpose Target population Related business

2012.9 Taxi To improve the efficiency of taxi services General population Taxis and buses complement
each other in terms of quality of
service
2014.9 Special car To improve the quality of taxi services Middle and high-end business men
2015.5 Express car Economical and practical General population A complement to the first two vehi-
cles, and being more economic
2015.6 Ride sharing Social contact and environmental protection People who travel in a group Adding social attributes
2015.7 Designated driving To provide professional drivers Car owners Expanding car-using circumstances
2015.7 Bus Large shuttle Daily office worker Application of big data
2015.10 Test drive Convenient trial run People who plan to buy a car
615

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driving (Table  1). It has more than 300 million users and 1.4 billion orders, with a total
value of more than $16.5 billion (China National Bureau of Statistics 2016). In August
2016, Didi took over Uber and thus became the world’s largest one-stop mobile travel plat-
form (People’s Daily 2016).

2.4 Data collection

In case studies, researchers usually use multiple data sources to obtain multiple descrip-
tions of the research phenomenon. In addition, the use of multiple data sources makes it
possible for researchers to ‘triangularly verify’ the different sources of evidence, and thus
improving the reliability and validity of the results (Glaser1967). This study collected mul-
tiple data sources—from three levels: government, industry and enterprise—which were
supplemented with multiple data types. First of all, data were collected through field inves-
tigation, which mainly refers to personal experiences in the use of Didi software, and then
through primary data, which mainly refers to the semi-structured interviews of different
types of Didi drivers. To avoid deviation resulting from retrospective sense making and the
subjectivity of the interviews, we only use the interview as an auxiliary means to gain data.
Moreover, secondary data were also considered, including: (1) materials obtained directly
from the enterprise, such as enterprise websites, public reports, executive speeches and the
WeChat official account; (2) public information and reports from media such as TV inter-
views and the Internet; and (3) policy documents issued by the government.

3 Research framework

The co-evolution theory originated from a study on the co-evolution of butterflies and
plants (Ehrlich and Raven 1964). It was then referenced by sociology and gradually trans-
ferred into a mature sociological concept. Co-evolution refers to the common changes and
coordination relationship of various interrelated elements. The development of society is
based on the development of the organisation, and the coordination of the system and its
co-evolution. Social organisations and industry organisations are the main forces to pro-
mote the co-evolution of society, industry and systems.
The institutional theory has gone through two stages in its development process, namely,
institutional change theory and institutional adaptation theory (Lewin and Volberda 1999).
The institutional change theory emphasises the irreversibility of institutional change and
its external rigidity. According to this theory, institutional change is a process of natural
change of external environment, and the organisations in the institutional environment
cannot affect and change the institutional environment (Castel and Friedberg 2010). The
institutional adaptation theory emphasises the internal flexibility and adaptability of insti-
tutional change. According to this theory, institutional change is the interaction between
environment and organisation caused by the changes in the organisation, and there is a
subtle relationship of interdependence and mutual change between the organisation and the
institution environment that the organisation exists, where the organisation plays an endog-
enous role in the environment (Kwee et al. 2010).
Laws, rules and beliefs in the external environment will restrict the structure and behav-
iour of the organisation. Under this institutional restriction, the response of the organisa-
tion either shows as convergence or manifests as legitimacy seeking. Meanwhile, insti-
tutional change not only has a top-down effect, but also has a bottom-up effect. In other

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Nat Hazards (2018) 91:611–633 617

Enterprise innovation
Internal governance
Political strategy

Economic
Political
environment
environment

Enterprise

Interaction among
the three parties

Government Society

Social innovation
Social influence
Government innovation Social
Technological Legality
Role change environment
environment
Institutional innovation

Fig. 1  Research framework

words, there is a lot of interaction between institutional change and enterprise behaviour
evolution. Current studies mainly analyse the evolutionary process from the levels of insti-
tutional entrepreneurship and social movement (Lounsbury and Glynn 2001). Institutional
entrepreneurship refers to a series of activities where individuals or organisations change
the standard and mode of the original system to create and develop a new system. Social
movement is the collective challenge to the authority of the economic, political and cul-
tural fields from a group of people aiming to promote or resist social changes at different
levels of society.
As a new economic model, the sharing economy influences the redistribution of inter-
ests among stakeholders during its developmental process. The old economic system man-
agement standards and institutional environment will inevitably bring some obstacles to its
development. The introduction of public policies and regulations that affect the operation
of enterprises has been the result of the power struggle and the balance of interests among
various interest groups (including enterprises). Therefore, it is very important to explore
the coordination process of organisational and institutional environments from a dynamic
perspective (Bruni and Verona 2009). To summarise, the basic framework of this study is
shown in Fig. 1.

4 Case findings

In Didi’s development process, there were several milestone events. In January 2014,
along with the subsidy war, Didi experienced rapid growth in market share; in September
2014, with the launch of the special car service, Didi was faced with illegal policy risk;

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in August 2016, with the introduction of a new policy on the special car of the online
ride-hailing system, Didi’s special car service gained its legal status officially. According
to the milestones in the process of Didi’s growth, we divide the development of Didi into
four stages: 2012.9–2014.1, the stage of regulatory gaps; 2014.1–2014.9, the stage of local
regulation; 2014.9–2015.10, the stage of comprehensive supervision; 2015.10–present, the
legalisation stage. Based on these divided stages, this study attempts to analyse the enter-
prise operation, government regulation, social influence and the co-evolution relationship
of these three parts at each stage.

4.1 The stage of regulatory gaps (2012.9–2014.1)

4.1.1 Enterprise operation

Small Orange Science and Technology Ltd. in Beijing was founded in 2012; its main busi-
ness is to manage the online ride-hailing app. Owing to a lack of co-operators with a good
understanding of products and product development, the company had to spend ¥80,000
on outsourcing their product development. Since the product failed to meet standards, its
launch was delayed many times, until September 2012, when the ‘Didi Dache’ went online
and was subsequently promoted in cities such as Beijing and Shenzhen. In the early stages,
due to insufficient research and development strength, the company was restricted to a large
extent, leading to unstable operations and a bad user experience. At this time, the team’s
main job was to find software bugs and update the product.
As Didi is a market educator of online ride-hailing software, all its innovation activities
experienced a cold start. Didi is supposed to teach people how to take a taxi using a mobile
terminal app, how to grab orders and how to make deals through mobile payment. Moreo-
ver, it is essential for Didi to persuade taxi companies, taxi drivers and passengers that it is
a trustworthy service in public transportation. Furthermore, it is important to communicate
with the government supervision department, which is a time- and patience-consuming
process. To ‘deeply awaken’ the related parties is the most difficult stage for Didi.

4.1.2 Government regulation

In the company’s initial stage, it made a special visit to the Beijing Transportation Commis-
sion in order to gain the cooperation of government departments. The company’s founding
team tried to gain approval and support from the government departments by showing them
the phone application, which was not perfect at that time, but they were not successful. With
the development of mobile Internet technology and the popularity of smart phones, there were
more than 40 pieces of online ride-hailing software launched in China by 2012. In February
2013, the China’s Ministry of Transport enacted the ‘Notice on Regulating the Development
of Taxi Online Calling Service’, which made it clear that ‘the taxi online calling service should
be vigorously promoted, and a variety of innovative models including mobile terminals should
be encouraged’.2 In August 2013, the ‘Beijing Taxi Control Center 96106’ was established by
the Beijing Traffic Management Bureau. This required all online ride-hailing software, such as
Didi Dache, to manage their orders through 96106 only, instead of using their own app. Didi

2
  The China’s Ministry of Transport, the ‘Notice on Regulating the Development of Taxi Online Calling
Service’, 2013, Traffic and Transportation Office documents (2013) No. 144. http​://www.zgjt​b.com/zhua​
nti/2015​-10/13/cont​ent_5350​6.htm. Accessed on 4th December 2016.

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Nat Hazards (2018) 91:611–633 619

submitted to this demand, but at the same time kept its own app. As the ‘96106’ control centre
system was not smooth and its order processing efficiency was low, a few months later it had
to withdraw from the stage. Didi’s own app survived successfully.
At this stage, Didi’s political strategy was a passive response type. What online ride-hailing
software such as Didi Dache did was merely collect, arrange, analyse and spread the supply
and demand information of taxi drivers and passengers through a mobile Internet informa-
tion platform, in order to improve both the efficiency of passengers’ taxi journeys and drivers’
operations, and there was no violation of existing policies and regulations. Since online ride-
hailing platforms were then a newly developed concept, the government adopted an attitude of
observation towards it, with basically no regulatory influence.

4.1.3 Social influence

To conduct the initial promotion, Didi paid visits to taxi companies in order to establish coop-
eration and persuade taxi drivers to install the ride-hailing software. Most taxi companies
questioned the legality of Didi, and they asked Didi to show related government documents,
thus refusing to cooperate with Didi. According to its founder Cheng Wei, in the initial stage
the efforts of looking for taxi companies with whom to cooperate, and organising drivers in
terms of having software training, were ineffectual. Didi visited 100 taxi companies (the total
number of taxi companies in Beijing is 189), and most of them refused to cooperate, stating
that Didi had no relevant documents from the Beijing Transportation Commission. At this
stage, people had no idea of the online ride-hailing software, and it was difficult for Didi to
publicise itself and its service. Didi then attempted ground-based promotion in taxi gathering
places such as stations, railway stations, gas stations, airports, driver shift places. It told driv-
ers one by one what is smart mobile phone, what is cell phone traffic, how to use the software,
and assisted drivers to install the software face to face. After a year of hard work, in May
2013, the number of registered drivers on the Didi platform reached 70,000, with 1.5 million
passengers registered. By October 2013, its business scope had expanded to 32 cities, such
as Beijing, Shanghai. It attained a 59.4% market share, exceeding the total market share of
other ride-hailing software, which was followed by Didi’s acquisition of cognitive legitimacy
among the public.

4.1.4 Co‑evolution

Since online ride-hailing software was a brand new concept, it was initially subjected to
few policy regulations. In the initial stages, Didi mainly adopted a defensive political strat-
egy to avoid being blocked. As a new mobile application based on information technology,
Didi was rejected and questioned by taxi companies and drivers at the very start, due to a
lack of approval and support from public administrations. The main means available to Didi
was to conduct a positive ground-based promotion, which won it the first batch of users. In
addition, it had a higher order processing efficiency than that of call platforms established by
the public sector, which helped it gradually to be accepted by the public and allowed further
development.

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4.2 The stage of local regulation (2014.1–2014.9)

4.2.1 Enterprise operation

In January 2014, Didi received a series C financing of $100 million from funders including
the Chinese Internet company Tencent and reached a strategic cooperation with WeChat
to launch fare subsidy marketing activity for those who pay with WeChat. It offered more
than ¥100 million in subsidies each week, leading to a boost in Didi’s order volume. This
increase put great pressure on its competitor, Kuaidi, who then cooperated with Alipay to
offer subsidies for passengers and drivers, too. Tug of war between the two sides continued
until May, with a total investment of more than ¥2 billion.
The most valuable resource accumulated through the subsidy war was user data, and
Didi’s business model was destined to be built on the basis of big data management. Didi
began to recruit the best algorithm experts and cooperate with universities and research
institutions, exploring how to continuously optimise taxi scheduling. Although Didi had
obtained a successful ride-hailing rate, as high as 75% in Beijing (the average rate in major
cities was over 70%), Cheng Wei believed that there was still great potential for improve-
ment. Thanks to a better scheduling algorithm, Didi planned to launch a new travel service
to help more passengers use the taxi service.

4.2.2 Government regulation

In early 2014, there were more than 40 ride-hailing apps in China. Emerging along with the
subsidy war was an obvious increase in the number of taxi-hailing app users. However, the
prevalence of taxi software also brought some traffic and security drawbacks. For example,
the drivers use their mobile phone to grab orders when driving. It also made it more diffi-
cult for middle-aged and elderly people to use the taxi service, people who were not famil-
iar with the use of smart phones or those who did not install a ride-hailing app. The gov-
ernment began to pay attention to the management of ride-hailing software, and a number
of local traffic management bureaus also took some managerial actions. On 1 March 2014,
the Shanghai Transportation Commission announced that it would ‘prohibit the use of taxi
software in the morning and evening rush hours’ in the name of ‘easing the taxi-hailing dif-
ficulties during the rush hours for the non-Didi users’—this peak time forbidden rule was
accepted by Didi.3 On 23 April 2014, the Suzhou Municipal Traffic Management Bureau
made the decision to ‘prohibit drivers from using the driver terminal of online ride-hailing
software like “Didi Dache”’. According to Wangxin, vice-president of Didi, ‘in the Suzhou
market, drivers and passengers always use software spontaneously. The company thought
that some contents in the contract were too harsh. For example, it was not only required to
pay access fee, but also was deprived of their own scheduling rights’. Didi refused to take
the advice from the Suzhou Traffic Management Bureau, which resulted in Didi’s once
being withdrawn from the Suzhou market, and Suzhou passengers could not use Didi over
a period of time.4

3
  Xinmin.cn, Didi and Kuaidi are forbidden during rush hours in the morning and evening from 1st March
onwards in Shanghai. http​://shan​ghai​.xinm​in.cn/msrx​/2014​/02/26/2362​6033​.html​. Accessed on 27th
December 2016.
4
  The Suzhou Traffic Management Bureau, ‘Notice on prohibiting use of mobile ride-hailing software, such
as “Didi Dache”, from the driver’s side’. xinhuanet.com. http​://www.js.xinh​uane​t.com/2014​-04/23/c_1110​
3688​90.htm. Accessed on 4th December 2016.

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Nat Hazards (2018) 91:611–633 621

At this stage, Didi used a passive response in its political strategy. Although being
restricted by local government, Didi was, overall, in a good institutional environment. On
17 July 2014, the General Office of the Ministry of Communications issued a ‘Notice on
Promoting the Orderly Development of Online Taxi-hailing Service such as Mobile Ride-
hailing Software’ to encourage the use of mobile software in taking a taxi, which provided
Didi with a good policy space.5

4.2.3 Social influence

During the subsidy war between Didi and its rivals, Didi spent ¥1.4 billion on subsidies
within 77 days, and its users surged from 22 million to 100 million, its average daily orders
increased from 350,000 to 5,218,300, the cities it covered increased from 32 to 178, and
the market share of Didi and Kuaidi combined reached 98% (Cao et al 2015). More impor-
tantly, following the subsidy war between these two giants, Didi gained a growing popular-
ity throughout the country. Its market was further extended to the 3rd- and 4th-tier cities,
which helped it to accomplish market education rapidly, and the popularity of taxi-hailing
software was also enhanced.
Cheng Wei felt proud that their efforts had changed the way people travel. At least in
the taxi industry, about 30–50% of travel was realised using taxi-hailing software. Further-
more, about 60% of Didi users requested cars in a WiFi environment, meaning that a con-
siderable number of users have given up the old habit of hailing a car by waving along
the road, but instead sit comfortably indoors, waiting for the requested car. According to
Cheng Wei, ‘the faster penetration of the Internet in the traditional industry contributes to
the rapid growth of Didi’.

4.2.4 Co‑evolution

At this stage, Didi has established its cognition among the public and has attracted a large
number of users through a huge level of subsidies. Subsidies allow users to take a taxi with
nearly zero cost, which changed the users’ previous travel habits. Meanwhile, the increased
efficiency offered by ride-hailing apps was recognised by users, which in turn brought Didi
an external normative legitimacy. However, along with Didi’s development, local govern-
ments made some restrictions on Didi. Since there was no policy support, and no formed
public opinion, Didi had no other choice but to respond negatively.

4.3 The stage of comprehensive supervision (2014.9–2015.10)

4.3.1 Enterprise operation

Under the double control of licence and price, the taxi industry in China developed slowly,
meaning it was unable to meet the growing demand for public travel. Didi Dache managed
to revitalise the ‘stock’ of the taxi market by collecting, analysing, matching and spread-
ing supply and demand information through its mobile applications. But Didi transferred

5
  The General Office of the Ministry of Communication, ‘Notice on Promoting the Orderly Development
of Online Taxi-hailing Service such as Mobile Ride-hailing Software’, Transport and Delivery documents
Traffic and Transportation Office documents (2014), No. 137, 17th July 2014. http​://zizh​an.mot.gov.cn/zfxx​
gk/bnss​j/dlys​s/2014​07/t201​4071​7_1650​627.html​. Accessed on 4th December 2016.

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their focus to ‘find increment’ later, considering that even if 90% of taxi drivers are using
the ride-hailing software, passengers still cannot find a car quickly during peak hours. The
‘Didi Special Car’, as a solution based on market research, met the individual demands of
quantity and quality at the same. In order to offer the best experience to all Didi users, Didi
chose drivers with 5  years’ driving experience and no violation records in 3  years to be
trained in their ‘Didi College’, following which 50% of those excellent drivers who passed
the assessment would be accepted as drivers of the special cars.
The huge traffic increase triggered by the subsidy war brought about the phenomenon
of Didi’s carrying capacity being insufficient to deal with the storage and process of mass
data. Therefore, Didi transferred its main site to Tencent Cloud, which has mature tech-
nology and a large carrying capacity. With Tencent Cloud’s help in the three aspects of
maintaining system security, optimising the network, and maintaining and operating hard-
ware, Didi could focus more on new technology aspects such as the application perspec-
tive, the business perspective and the more valuable perspective of data analysis. By the
end of 2014, newly increased data in Didi’s platform had reached 5 TB each day. In order
to achieve a high level of accuracy and efficient information matching, Didi was supposed
to collect both the drivers and passengers’ dynamic information (location information, time
information) and static information (user profile). A variety of information was then col-
lected. The collected unstructured data, which differed in size and format, could only be
analysed using professional big data analysis technology, so as to reveal important relation-
ships that were difficult or impossible to determine before. Different taxi scenes suggested
that a real time velocity was required.
There is a great demand for cars during rush hours every day. However, because of road
congestion, drivers always have poor economic returns. Therefore, many drivers choose to
have dinner or to have a shift during this period, which will affect passengers’ car-using
experience and efficiency. Didi then implemented a dynamic price adjustment mechanism
with the aid of cloud price management. In other words, a more flexible pricing strategy
was adopted to match the market as well as supply and demand in the peak and trough
periods.
Didi devoted itself to building a responsible, open and transparent platform to ensure
a quality passenger experience and focused much attention to establishing a driver eval-
uation system for passengers, in which users could rate the driver following his service.
Didi would then publicise a series of regulation policies, including this score, to make sure
that both drivers and passengers could see the score before each transaction. In this way,
passengers could select a good driver, and identity and reputation information asymme-
try were then reduced. The platform would also give drivers corresponding rewards and
punishments.

4.3.2 Government regulation

Although Didi did not violate the existing policies and regulations when it was only run-
ning its taxi-hailing business, the company was placed in an embarrassing illegal situa-
tion by its violation of existing policies and regulations in September 2014 when the Didi
Special Car was officially launched. When the Didi Special Car was about to launch, there
were more than 2000 cars registered in its Beijing branch using mobile phones. However, it
was halted urgently at the launch, and only those self-operation cars survived. At the same
time, the high level of subsidies on cars also violated the relevant provisions of the price
law. Local governments declared one after another that it was illegal for private cars to join

13
Nat Hazards (2018) 91:611–633 623

up as special cars, and they had some interviews with the Didi agency in different cities
(see Table 2). They demanded that there be a normalised qualification examination for the
special car drivers, that the commercial SMS should be stopped and that the quality of Didi
services should be improved. If a private car was caught conducting special car operations,
the car would be detained, and it would be given a fine of up to ¥20,000 if necessary.
At this stage, Didi’s political strategy was one of positive response. There is no doubt
that Didi’s action in using private cars to provide taxi services violated the existing regula-
tions. To be rid of its illegal status, Didi explored a ‘quadripartite agreement’ model. In this
model, Didi was positioned as an information service platform; car rental companies were
responsible for offering qualified vehicles, and the labour dispatch company was in charge
of providing drivers, and the drivers then offered services to passengers. These four parties
made an agreement with each other. There was no need for private cars to have a direct
connection with Didi, whose main task was to match drivers and passengers, and was then
paid depending on the orders it took, so as to avoid the supervision of law.
The specific political strategies that Didi adopted include political connection, institu-
tional innovation and political participation. First, the agencies of Didi in different cities
paid several visits to the local government to establish a close partnership and establish
cooperation with the government. In September 2015, a ‘Taxi Driver Service Center’ was
set up by the combined efforts of Didi in Shanghai, Shanghai Seagull Company, SAIC
and the Shanghai Transportation Committee, meaning that Didi had directly established a
political connection with government. Additionally, on 16 September 2015, the first spe-
cial car license was issued by the Shanghai Transportation Committee, which enabled Didi
Dache to become the first domestic company qualified to operate an online ride-hailing
platform, and it was an institutional innovation.6 Sun Jianping, head of the Shanghai Trans-
portation Committee, called the licence issue event ‘an amazing action’. He said: ‘the chil-
dren of Didi were born, and are ready to go to kindergarten. What is needed is a license
which is conditional’. The Shanghai Transportation Committee made certain requirements
regarding the insurance of the special car platform, driver qualification, quality of service
and price. On 23 September 2015, Cheng Wei, as one of the 15 representatives of Chinese
Internet companies, was invited to the Eighth China US Internet Forum by the National
Network Information Office. President Xi Jinping met with Cheng Wei at the Microsoft
offices and communicated with him, which is a direct reflection of political participation.

4.3.3 Social influence

The income of taxi drivers was affected by the Didi Special Car and Didi Express Car. On
the one hand, there was a decrease in the number of taxi orders because the special cars
and express cars met the demands of different passengers, thus attracting part of the market
share. On the other hand, taxi drivers were required to offer a large share of turnover to
taxi companies, which made the driver’s income shrink a lot. A lot of drivers focused their
resentment towards the special or express car drivers and on the Didi Company. As a result,
some violent events against Didi Dache occurred (see Table 3).
The convenience and positive user experience of special cars gradually fostered the pas-
sengers’ usage habit, and it completely changed the passengers’ views on travel. At the

6
  The launching model of Internet ride-hailing service in Shanghai: Didi Kuaidi received their first license
of Special Car. http​://news​.163.com/15/1008​/14/B5DN​2HDN​0001​4AED​.html​. Accessed on 4th December
2016 (in Chinese).

13
 Table 2  Interviews with local government since the appearance of the Didi Special Car
624

Time City Event

13
2014.10 Shenyang Shenyang’s Department of Transport decided that the special car without business licence was illegal
2014.11 Nanjing Passenger Management Office of Nanjing forbade non-leasing enterprises such as private cars and affiliated
vehicles from having car rental business
2014.12.3 Nanjing Department of Transport in Nanjing had an interview with Didi
2014.12.23 Taiyuan Taiyuan Passenger Office issued an administrative penalty decision to Didi
2015.1.7 Beijing Municipal Transportation Bureau, Municipal Public Security Bureau and network security department had
interviews with Didi Special Car’s relevant person in charge
2015.1.12 Shanghai Shanghai Traffic Enforcement Corps made an appointment with Didi and wrote Didi Special Car a ticket for
the first time
2015.1.17 Chendu Municipal Transportation Commission and Ministry of Public Security had interviews with Didi, Kuaidi,
Shenzhou and Uber
2015.3.26 Hangzhou Hangzhou Highway Transportation Management Bureau had an interview with ‘special’ service platform
enterprises such as Didi
2015.4.24 Xiamen The City Traffic Comprehensive Administrative Law Enforcement Detachment and Transportation Manage-
ment Division had interviews with the head of Didi Special Car
2015.5.6 Wuhan Passenger Management Office of Transportation Commission declared The Norms on Standardizing Infor‑
mation Service of Taxi Software and had interviews with persons in charge
2015.5.12 Luoyang Didi agency in Luoyang was jointly closed down by Luoyang Transportation Commission and the business
sectors
2015.6.2 Beijing Beijing Traffic Management Bureau, City Traffic Enforcement Corps and Public Security Corps of
Municipal Public Security Bureau had interviews with the person responsible for the Didi Special Car and
pointed out that it was illegal for private cars to join it
2015.6.8 Chongqing Several departments in Chongqing had interviews with persons in charge
2015.6.8 Yangzhou Passenger Management Office of Transportation Commission in Yangzhou had interviews with persons in
charge of the Didi Special Car
Nat Hazards (2018) 91:611–633
 Table 2  (continued)
Time City Event

2015.7.23 Beijing Eight sectors (Beijing Transport Administration of Transportation Commission, Beijing Traffic Enforcement
Corps, Beijing Public Security Corps of Public Security Bureau, Development and Reform Commission
of Beijing, Bureau of Industry and Commerce of Beijing, Beijing IRS, Beijing Communications Adminis-
tration, Beijing Network Office) had interviews with Didi for the second time
2015.8.18 The whole country Five ministries (Ministry of Transport, National Development and Reform Commission, Ministry of Indus-
try and Information Technology, Ministry of Public Security, National Internet Information Office) had
talks with Didi, Usber, Shenzhou and Yiyong
Nat Hazards (2018) 91:611–633

2015.8.31 Shenzhen Shenzhen Passenger Management Office of Transportation Commission and Ministry of Public Security
had talks with Didi, Usber, Yiyong, etc.
625

13
 626 Nat Hazards (2018) 91:611–633

Table 3  Boycott events of Didi Dache in different regions

Time City Event description

2015.1.4 Shenyang Thousands of taxis went on strike in order to express their dissatisfaction
towards special cars and unlicensed cabs
2015.3.30 Jinan Special car driver Chenchao was fined, and he appealed and was successful
2015.5.21 Tianjing Violent conflicts between taxi drivers and special car drivers occurred
2015.5.27 Zhengzhou Taxi drivers hit drivers of Didi’s Special Car
2015.5.30 Jinan Taxi drivers collectively uninstalled Didi software
2015.6.10 Guangzhou Special car drivers protested collectively against occupying road
2015.6.20 Hangzhou Account blocking and fine events of Didi

same time, plenty of private car owners earned extra income through Didi by working as
part-time drivers of special or express cars. Didi created great value for both the drivers
and passengers, and its sharing economy model has been widely accepted by the public. By
2015, Didi had already provided for more than 200 million users in over 360 cities in China
with taxi, special car, ride sharing, designated driving and intelligent bus services.7 It had
7 million orders per day, of which more than 3 million were special car orders, accounting
for over 80% of China’s special car service market. At the same time, another 3 million
orders were taxi orders, occupying a share of more than 99% in the online ride-hailing mar-
ket. Didi survived the cracks of policy attack and the voice of doubt from the public.

4.3.4 Co‑evolution

The launch of the Didi Special Car was faced with disputes regarding its illegitimacy, and
regulations and restraints from the public sector; this was then considered along with the
various violent incidents caused by the shrinking benefits of taxi companies. These shrink-
ing benefits of taxi companies resulted in Didi being frequently interviewed by the govern-
ment at this stage. In such an adverse institutional environment, Didi adopted a political
strategy of active response. On the one hand, it participated in relevant national confer-
ences in the form of political participation. On the other hand, it adjusted its internal sys-
tem actively to avoid policy risks. With the appearance of the Didi Special Car and Express
Car, consumers’ travel habits were completely transformed. User stickiness was formed,
and the ecological pattern of the whole industry was changed. At the same time, the public
and experts made great efforts to rectify Didi’s name, and Didi’s logic of the sharing econ-
omy was then widely accepted, and its normative legitimacy was initially formed.

4.4 The legalisation stage (2015.10–present)

4.4.1 Enterprise operation

With the appearance of the special car business, express car business and carpool business,
private cars were introduced to the taxi system. Since most drivers were individuals oper-
ating in their spare time, of various professions, there were great differences in personal

7
  Didi Chuxing. The 2015 big data report of Intelligent Travelling in China. Beijing: 2016 (in Chinese).

13
Nat Hazards (2018) 91:611–633 627

online operation time, vehicle condition and driving experience. Compared with the previ-
ous taxi drivers, the service normalisation and quality of these drivers fluctuated quite a lot.
Moreover, the operation base of Didi became even greater following the merger between
Didi and Kuaidi. Therefore, there were sometimes occurrences of certain Didi drivers har-
assing or insulting passengers. The security of taking a car has become the main critical
point related to the online ride-hailing platform. On 27 October 2015, Didi joined with
Shanghai Ping An Property Insurance to roll out ‘All Risk Accidental Insurance for Drivers
and Passengers using Didi Platform’—a first in the industry. This insurance was insured by
the Didi platform, and drivers and passengers were not required to pay any additional costs.
The insurance would cover all Didi platform drivers and passengers except those related
to the taxi business. With this insurance, each person would be paid a maximum of ¥1.2
million compensation if any accident occurred in the process of normal driving from the
departure to the destination.
By using smart phone terminals, and with the assistance of mobile Internet, Didi ena-
bled easy registration for both the drivers and passengers, providing great convenience
for both parties. Though there was a strict access system for drivers—for example, driv-
ers were required to offer such information as motor vehicle licence, driver’s qualification,
driving years and personal identity information when registering—it was difficult to ensure
the authenticity and comprehensiveness of this data because there were too many driv-
ers and passengers in Didi’s system platform, and Didi itself did not have the professional
ability to identify such data. To solve this problem, Didi and the traffic police department
conducted a driver information docking to filter out unqualified drivers, and thus ensure the
safety of passengers.

4.4.2 Government rules

In the face of the pressure of public opinion and market trends, on 10 October 2015, the
General Office of the State Council issued ‘The Guiding Opinions on Deepening the
Reform to Promote the Healthy Development of the Taxi Industry’ (draft for comment) and
‘The Interim Measures for the Online Ride-hailing Operation and Service Management’
(draft for comment).8 On 14 July 2016, the Ministry of National Transportation and multi-
ple other departments jointly issued the final versions of the above two policy documents.
These documents relaxed the restrictions on the online ride-hailing service and officially
recognised the legal status of the special car, meaning that Didi formally obtained legiti-
macy at the regulatory level.
At this stage, Didi’s political strategy was to actively shape policy. The specific political
strategies that were adopted by Didi include information offers, the mobilisation of soci-
etal forces, political participation and political connections. In January 2016, the Research
Institute of Didi released The Report of Big Data of China’s Intelligent Travel, 2015. This
report was an interpretation of China’s urban travel and its substantial contribution to urban
development based on the comprehensive data in the Didi platform, which provided a
multi-angle and data-driven centralised presentation. This report indirectly provided infor-
mation support and a basis for decisions in government policy making.

8
  The General Office of the State Council, ‘The Interim Measures for the Online Ride-hailing Operation
and Service Management (draft for comment)’. http​://www.chin​anew​s.com/cj/2015​/10-10/7562​706.shtm​l.
Accessed 7th December 2016.

13
 628 Nat Hazards (2018) 91:611–633

Didi actively mobilised social forces to contact people from all walks of life in order
to create a good institutional environment. At the time when the special car administra-
tion was still unclear, Didi conducted various forums with media, consumers and indus-
try experts to trigger discussions on sharing economic regulation. The draft for comment
issued by the government in October 2015 received feedback consisting of more than 3000
comments most of which are opinions supporting the legalisation of the Didi Special Car.
From the perspective of political participation, Cheng Wei, as the chairman of Didi,
frequently attended a variety of official and unofficial forums and delivered many speeches.
For example, in the Wuzhen summit ‘Internet Light’ Expo in December 2015, Cheng
Wei presented to Chinese President Xi Jinping the growth of Didi in the past 3 years, and
the application of big data platforms in the future. Cheng Wei was also invited by related
national departments to give speeches in the Asia Boao Forum in February 2016, the Chi-
nese Big Data Industry and Chinese E-commerce Innovation and Development Summit in
May, and the Fourth Global Think Tank Summit in June 2016.
Didi also signed strategic cooperation agreements with traffic police detachments of
the Public Security Bureau in many cities, such as Shenzhen, Jinan and Changsha. They
agreed to have deep ‘Internet + Traffic Management’ cooperation in such aspects as urban
road traffic management, research and development of technology, data sharing, urban traf-
fic planning, citizen travel service.

4.4.3 Social influence

After the introduction of national policy, the attitudes of local government towards the
special car gradually became clear. They admitted the legal status of the special car and
relaxed investigation and punishment towards special car drivers and platforms. At the
same time, in the face of pressure from traditional taxi drivers, the relevant management
departments started to reform the traditional taxi industry. The taxi operating fee was can-
celled in cities such as Shenzhen, Suzhou, Wuxi, Changzhou, Xuzhou, Nanchang, Nan-
jing, Ningbo, Jinhua, Hangzhou, Yiwu, Wuhan and Changsha. Taxi companies have also
reduced the corresponding common charges due to the taxi drivers’ protest and the decline
of renewing drivers after the expiration of the operating right.
After the introduction of the draft for comment by the Ministry of Transportation, Inter-
net users and experts of different fields have launched a heated discussion, establishing a
number of large-scale forums spontaneously. The forums communicated various questions,
including the deep reasons that caused the disputes around the draft document, the possible
influences on the entire Chinese economic society and industrial developments caused by
relevant regulations, as well as how to promote the development of the new business type,
such as the online ride-hailing service.

4.4.4 Co‑evolution

In October 2015, the government made concessions because of a more proactive politi-
cal strategy in the previous stage. Although the new draft still restricted the special car
in many aspects, it meant that Didi had basically removed the legal dilemma. Faced with
the government’s loose attitude, Didi quickly adopted a political strategy to actively shape
policy. Didi used a variety of political strategies to compel government to admit the legal
status of the special car in the official documents issued in July 2016 and cancel many
restrictions in the draft. Didi won a beneficial institutional environment for itself. Under the

13
Nat Hazards (2018) 91:611–633 629

strong influence of Didi, some major taxi companies reduced their common charges one
after another, and they joined hands with government to reform the traditional taxi indus-
try. At this point Didi basically obtained internal and external legitimacy.

5 Conclusion

Through the case of Didi Chuxing, this study showed the co-evolution model between shar-
ing economy enterprise and government policy regulation. At the first stage, Didi adopted
a passive political strategy in the face of regulatory gaps. It managed to conform to the
government’s requirements. On the other hand, it optimised its own business actively by
starting from the taxi market and then gradually expanding its market share. At the second
stage, Didi finished financing successfully. It carried out a large-scale subsidy war, through
which Didi won large amounts of users. Its user scale achieved a qualitative leap, which
caused alarm from the government. The government took restriction measures on some
aspects, but Didi was not affected too much. At the third stage, to develop an incremental
market, Didi introduced special cars, which intensified policy conflicts, and Didi was faced
with huge policy risk. Didi responded actively to policy risks by introducing the quartet
agreement and cooperating with relevant departments. Meanwhile, Didi developed new
businesses constantly and established them initially on an integrated travel platform. In the
final stage, Didi cooperated with several third party enterprises. It extended from a bilat-
eral platform to a multilateral platform and developed a series of measures to ensure the
safety of both drivers and passengers. At the same time, Didi adopted a political strategy
to actively shape policy by introducing a series of social movements to put pressure on the
government, and by cooperating with government actively. It finally succeeded in pushing
the government departments to carry out institutional reform and innovation (see Table 4).
The findings and insights of this study were as follows.
First of all, the development process of Didi in this study shows the features of bottom-
up policy innovation and institutional change. Policy innovation and institutional change
in the past were mainly led by relevant government departments. New policies and regula-
tions will be drafted and implemented from top to bottom when problems and new situ-
ations are identified in the policy implementation process. Some incentive measures will
be utilised to encourage enterprises to adapt to the new norms. In this study, we found
that the development of online ride-hailing software and the publishing of industry policy
are a bottom-up process, mainly driven by enterprise innovation, followed by institutional
change. The development of enterprises preceded government regulations, and the devel-
opment of new technology provided the necessary service for public travel. Considering
that many old policies cannot keep up with the development of enterprises, the enterprises
took advantage of innovation for the supply of products and services to better meet the
needs of the market, and on the other hand, they cooperated with the government actively
to win a favourable policy environment for survival.
Second, the path choice of enterprise development will affect the acquisition of legiti-
macy to a great extent. Setting out with the integration of information, Didi effectively
avoided regulation risk at the initial stage of the enterprise. Subsequently, Didi realised an
extraordinary pace of development by way of subsidies. It chose to develop market incre-
ment through solutions to public travel services at a time when people’s travel habits and
attitudes were changing. The process of obtaining legitimacy is a process from internal
legitimacy to external legitimacy. In the process of obtaining external legitimacy, it fol-
lowed the path from cognitive legitimacy to normative legitimacy and then to regulation

13
 630

13
Table 4  Findings of different stages
The first stage The second stage The third stage The fourth stage

Government
 Institutional environment Regulatory gaps Partial restriction Illegal Legal
 Content of institution Regulatory gaps Notice Follow the old regulations Institutional reform and innovation
Enterprise
 Operation management Low threshold access Tips Access mechanism Special insurance
Standardised institution Dynamic matching of supply Information interchange
and demand
Cloud price management
Mutual evaluation system
 Political strategy Dependent response Dependent response Active reaction Actively shaping policy
 Political tactics No No Political participation Political participation
Institutional innovation Information consultation
Mobilise social forces
Political connection
Society
 Social influence Wait and early adopters User accumulation Violence incident Social movement
 Legality Cognitive legitimacy Normative legitimacy Normative legitimacy Regulation legitimacy
Co-evolution
 Government enterprise society Government ignorance Government concern Government restriction Government approval
Enterprise innovation Enterprise development Enterprise innovation Industry leader
Social education Social cognition Social acceptance Social approval
Nat Hazards (2018) 91:611–633
Nat Hazards (2018) 91:611–633 631

legitimacy. With digital empowerment, Didi subverted the traditional taxi industry and
integrated a large number of private car resources.
In the process of enterprise innovation, not only the problem of the number of travel
services was solved, but also the taxi drivers’ behaviour was improved in the continuous
improvement of the system. The behaviour of scalping and refusing to take passengers was
reduced, which improved the quality of travel services to a large extent. This change indi-
cated that Didi preceded others in obtaining internal legitimacy, and its pattern has been
widely recognised. The punishment delivered to Didi from the government was faced with
much pressure from public opinion, such that government was pushed to speed up policy
innovation and institutional change.
Third, in the mobile Internet era, external forces such as the public, experts and media
played important roles in shaping new policy. In the past, only a small number of repre-
sentatives participated in the policy generation and decision-making process, for example,
the taxi industry price hearings. The media played more a role of transferring policy. How-
ever, with the increasing development of mobile Internet, social media provided the general
public with more and more ways to make their voices heard, and the public’s willingness to
participate in the process of policy making is also growing. Several seminars organised by
non-government parties and held by benchmarking enterprises, and media big V’s9 points
of view were good examples. Accordingly, policy makers were also increasingly concerned
about the public opinion of social media. They collected thousands of comments in public
feedback on the new policy through the form of an open solicitation of opinions. The pub-
lic, experts and the media all played important roles in the formulation of public policy.
Fourth, the separation of ownership and right of use triggered by the sharing economy
provided the possibility for efficient use of resources. In the past, it was held that the gov-
ernment and the public sector were the best suppliers of public goods and quasi-public
goods. A platform business model can gather idle and not fully utilised resources in society
more effectively, and it can also bring more social benefits to both sides of the platform.
In the field of public travel, Didi not only effectively solved the problem of information
asymmetry and space–time asymmetry, but also brought new ideas to solve the problem
of the dynamic change of supply and demand, and public goods and service supply failure.
The effective use of resources not only reduced social operating costs, but also effectively
reduced carbon emissions and thus protected the environment. At the same time, the devel-
opment of sharing economy business models, such as Didi, in different fields also provided
more employment opportunities for society and promoted the growth of the economy as a
whole.
Fifth, the government should integrate social credit resources to build a more effective
credit system. The construction of the credit system is very important for the development
of the sharing economy. At the initial stage of Didi’s development, there was a cold boot
problem. Credit was required in real name authentication, the construction of a payment
system, and in persuading strangers to provide you with driving services and share the car
with you, etc. Although partial trust was constructed at different stages, it was difficult to
establish a comprehensive trust system. As for the government, there were also problems
such as the redundant construction of trust resources, and inefficient utilisation of trust
resources, so that trust resources could also be shared.

9
  Verified social media users who have more than 500,000 followers.

13
 632 Nat Hazards (2018) 91:611–633

Acknowledgements  This study was supported by the Natural Science Foundation of China (No.
71271079).

Compliance with ethical standards 

Conflict of interest  The authors declare that they have no conflict of interest.

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