Large-scale service marketplaces: The role of the moderating firm

Gad Allon*, Achal Bassamboo, Eren B. Çil

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

27 Scopus citations

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.

Original languageEnglish (US)
Pages (from-to)1854-1872
Number of pages19
JournalManagement Science
Volume58
Issue number10
DOIs
StatePublished - Oct 2012

Keywords

  • Asymptotic analysis
  • Fluid models
  • Large games
  • Noncooperative game theory
  • Service operations

ASJC Scopus subject areas

  • Strategy and Management
  • Management Science and Operations Research

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