Pricing Control and Regulation on Online Service Platforms

Information Systems and Operations Management

Speaker: Tolga Dizdarer (Wharton)

Zoom

Abstract:
Online service platforms enable customers to connect with a large population of independent servers and operate successfully in many sectors, including transportation, lodging, and delivery, among others. We study how prices are chosen and fees are collected on the platform. The platform could assert full control over pricing despite being unaware of the servers’ costs (e.g., ride sharing). Or the platform could allow unfettered price competition among the servers (e.g., lodging). This choice influences both the amount of supply available and the overall attractiveness of the platform to consumers. When the platform collects revenue via a commission, neither price delegation strategy dominates the other. However, the platform’s best payment structure is simple and easy to implement - it is merely the combination of a commission and a per-unit fee (which can be negative, as in a subsidy). Furthermore, this combination enables the delegation of price control to the servers, which may assist in the classification of the servers as contractors rather than employees.

If you wish to join the seminar by Zoom, please send your request to milevsky@hec.fr