Before revision:  The fleet of low-capacity vehicles is endogenously adapted to the demand . Considering both users' and operators' costs , we identify two sources of scale economies: when demand grows, the average cost is reduced due to  an equivalent of the Mohring Effect ( that is present in public transport), and  due to matching the users in more compatible groups when they are assigned to the vehicles, which we call Better-matching Effect.
After revision:  The routing of the on-demand fleet follows some of the rules of public transport systems; namely, it is not-for-profit, some users can be required to walk, and all requests must be served . Considering both users' and operators' costs , we identify two sources of scale economies: when demand grows, the average cost is reduced due to an equivalent of the Mohring Effect ( that is present in public transport), and due to matching the users in more compatible groups when they are assigned to the vehicles, which we call Better-matching Effect.