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

Management Science, 58 (10), 2012

33 Pages Posted: 23 Jul 2015

See all articles by Gad Allon

Gad Allon

University of Pennsylvania - The Wharton School

Achal Bassamboo

Northwestern University - Department of Managerial Economics and Decision Sciences (MEDS)

Eren Cil

University of Oregon - Department of Decision Sciences

Date Written: June 15, 2012

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 market- places seek quick resolutions and thus are usually willing to trade prices with waiting times. The main goal of the 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. Further, 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.

Keywords: Service operations, Fluid models, Asymptotic analysis, Large games, Non-cooperative game theory

Suggested Citation

Allon, Gad and Bassamboo, Achal and Cil, Eren, Large-Scale Service Marketplaces: The Role of the Moderating Firm (June 15, 2012). Management Science, 58 (10), 2012, Available at SSRN: https://ssrn.com/abstract=2634215

Gad Allon

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

Achal Bassamboo

Northwestern University - Department of Managerial Economics and Decision Sciences (MEDS) ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

Eren Cil (Contact Author)

University of Oregon - Department of Decision Sciences ( email )

Eugene, OR 97403
United States

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