Author
Listed:
- Linli Xu
(Carlson School of Management, University of Minnesota, Minneapolis, Minnesota 55455)
- Yanhao “Max” Wei
(Marshall School of Business, University of Southern California, Los Angeles, California 90089)
- Yi Zhu
(Carlson School of Management, University of Minnesota, Minneapolis, Minnesota 55455)
Abstract
Two-sided platforms (e.g., ride-sharing, freelance labor, and lodging) match customers and service providers. Customers can voice their satisfaction level through review/rating systems, which the platforms use to monitor and screen service providers. However, customers may misdirect complaints about platform-level features toward individual service providers. We examine the extent and consequences of this issue in the context of a large ride-sharing platform. We focus on surge pricing as the platform-level feature. Our findings are as follows. First, for an average trip, surge pricing makes it 1.13 times more likely for the driver to receive a complaint (either a low rating or a formal complaint). Second, complaints negatively impact a driver’s future income. Surge-induced complaints offset about 23% of a driver’s immediate gain from the surged fare. Third, after the platform adopted a policy to cap the magnitude of surge prices, the effect of surge on customer complaints reduced. The policy also led to more usage of the platform. The results suggest a close interaction between the pricing and review systems on ride-sharing platforms. More broadly, they point to the importance for online two-sided platforms to identify and address customer complaints about platform-level features that may have been misdirected to service providers.
Suggested Citation
Linli Xu & Yanhao “Max” Wei & Yi Zhu, 2025.
"Customer Voice on Two-Sided Platforms: The Effect of Surge Pricing on Customer Complaints,"
Management Science, INFORMS, vol. 71(8), pages 6729-6745, August.
Handle:
RePEc:inm:ormnsc:v:71:y:2025:i:8:p:6729-6745
DOI: 10.1287/mnsc.2024.4992
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