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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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    Cited by:

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    10. Dong, Su & Johar, Monica S. & Kumar, Ram L., 2023. "An optimization approach for hybrid workflows in platform-enabled private service marketplaces," European Journal of Operational Research, Elsevier, vol. 310(2), pages 874-890.
    11. Jun Li & Serguei Netessine, 2020. "Higher Market Thickness Reduces Matching Rate in Online Platforms: Evidence from a Quasiexperiment," Management Science, INFORMS, vol. 66(1), pages 271-289, January.
    12. Moshe A. Barach & Joseph M. Golden & John J. Horton, 2019. "Steering in Online Markets: The Role of Platform Incentives and Credibility," NBER Working Papers 25917, National Bureau of Economic Research, Inc.
    13. John Horton, 2018. "Buyer Uncertainty about Seller Capacity: Causes, Consequences, and a Partial Solution," CESifo Working Paper Series 6985, CESifo.
    14. John J. Horton, 2019. "Buyer Uncertainty About Seller Capacity: Causes, Consequences, and a Partial Solution," Management Science, INFORMS, vol. 65(8), pages 3518-3540, August.
    15. Zhong, Yuanguang & Yang, Tong & Cao, Bin & Cheng, T.C.E., 2022. "On-demand ride-hailing platforms in competition with the taxi industry: Pricing strategies and government supervision," International Journal of Production Economics, Elsevier, vol. 243(C).
    16. Yili Hong & Chong (Alex) Wang & Paul A. Pavlou, 2016. "Comparing Open and Sealed Bid Auctions: Evidence from Online Labor Markets," Information Systems Research, INFORMS, vol. 27(1), pages 49-69, March.
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    18. Kyung Sun (Melissa) Rhee & Jinyang Zheng & Youwei Wang & Yong Tan, 2023. "Value of Information Sharing via Ride-Hailing Apps: An Empirical Analysis," Information Systems Research, INFORMS, vol. 34(3), pages 1228-1244, September.
    19. Terry A. Taylor, 2018. "On-Demand Service Platforms," Manufacturing & Service Operations Management, INFORMS, vol. 20(4), pages 704-720, October.
    20. Kostas Bimpikis & Ozan Candogan & Daniela Saban, 2019. "Spatial Pricing in Ride-Sharing Networks," Operations Research, INFORMS, vol. 67(3), pages 744-769, May.
    21. Ming Hu, 2021. "From the Classics to New Tunes: A Neoclassical View on Sharing Economy and Innovative Marketplaces," Production and Operations Management, Production and Operations Management Society, vol. 30(6), pages 1668-1685, June.
    22. Amiya K. Chakravarty, 2021. "Blending Capacity on a Rideshare Platform: Independent and Dedicated Drivers," Production and Operations Management, Production and Operations Management Society, vol. 30(8), pages 2522-2546, August.

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