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Large-Scale Service Marketplaces: The Role of the Moderating Firm

Author

Listed:
  • Gad Allon

    (Kellogg School of Management, Northwestern University, Evanston, Illinois 60208)

  • Achal Bassamboo

    (Kellogg School of Management, Northwestern University, Evanston, Illinois 60208)

  • Eren B. Çil

    (Lundquist College of Business, University of Oregon, Eugene, Oregon 97403)

Abstract

Recently, large-scale, Web-based service marketplaces, where many small service providers compete among themselves in catering to customers with diverse needs, have emerged. Customers who frequent these marketplaces seek quick resolutions and thus are usually willing to trade prices with waiting times. The main goal of this paper is to discuss the role of the moderating firm in facilitating information gathering, operational efficiency, and communication among agents in service marketplaces. Surprisingly, we show that operational efficiency may be detrimental to the overall efficiency of the marketplace. Furthermore, we establish that to reap the "expected" gains of operational efficiency, the moderating firm may need to complement the operational efficiency by enabling communication among its agents. The study emphasizes the scale of such marketplaces and the impact it has on the outcomes. This paper was accepted by Yossi Aviv, operations management.

Suggested Citation

  • Gad Allon & Achal Bassamboo & Eren B. Çil, 2012. "Large-Scale Service Marketplaces: The Role of the Moderating Firm," Management Science, INFORMS, vol. 58(10), pages 1854-1872, October.
    • Handle: RePEc:inm:ormnsc:v:58:y:2012:i:10:p:1854-1872
    DOI: 10.1287/mnsc.1120.1533
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    References listed on IDEAS

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