# **1. Introduction**

Motorbike-based ride-hailing services have grown exponentially in many of the heavily congested cities in the developing world. While this growth has expanded the mobility options of urban residents, it has also prompted fears that the convenience and low prices of these services are undermining the viability of public transport investments, with potentially negative repercussions for traffic congestion, greenhouse gas emissions, local air pollution levels, and, through these, the health and productivity of a city’s residents. Against this, however, it has also been argued that, far from being substitutes for public transport, ridehailing services may, in fact, be complements due to the first- and last-mile connectivity that they provide. A trip from, say, the workplace to home that involves public transport for the main portion of the trip plus use of a ride-hailing service for the first and/or last mile of the trip may offer a more convenient, less costly, and/or less polluting transportation option than was hitherto available.<sup>1</sup> In this paper, we empirically investigate whether ride-hailing services and public transport are substitutes or complements in such a developing country city context. In particular, we examine the impacts of the staggered opening of Jakarta’s mass rapid transit (MRT) system on the use of ride-hailing services in the immediate neighborhoods of newly opened MRT stations. In doing so, we take advantage of (anonymized) spatially very fine-grained daily ride-hailing activity data from _Gojek_ , which, together with _Grab_ , dominates the Indonesian ride-hailing market, as well as daily tap-in and tap-out data from Jakarta MRT.

Jakarta officially opened its first MRT line, which consists of 13 stations, on March 24, 2019. This opening, however, was staggered in the sense that it was immediately preceded by a 12-day limited public trial during which no charge was made for use of the metro, but ridership was capped. This was followed by a further one-week period during which users could continue to ride the MRT for free. On April 1, 2019 fares were introduced, but still at a 50 percent discount. On May 13, 2019 full fares started to be charged. Using an event study research design, we examine how this staggered opening of Jakarta’s first MRT line impacted _Gojek_ activity – defined as the sum of the number of trips originating (pick-ups) and terminating (dropoffs), as well as the average distance of those trips, within 50 and 100-meter radii of the newly opened MRT stations – relative to that in a set of control locations. These control locations consist of both planned, but not yet opened, station locations on the next phase of Jakarta’s MRT system, as well as locations on the newly opened MRT line in-between the actual stations.

Overall, we find strong evidence in favor of the complementarity hypothesis. Relative to the control locations, the opening of Jakarta’s MRT system had a large, positive impact on the number of ride-hailing

> 1 See Gendron-Carrier _et al._ (2022) for evidence of beneficial effects of the opening of mass rapid transit systems on both local levels of air pollution and health for initially highly polluted cities. Heger _et al_ . (2019) provide similar evidence for the extension of Cairo’s metro line in the Arab Republic of Egypt.

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