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What Drives Pricing Behavior in Peer-to-Peer Markets? Evidence from the Carsharing Platform BlaBlaCar

48 Pages Posted: 24 Aug 2016  

Mehdi Farajallah

ESC Rennes School of Business

Robert G. Hammond

North Carolina State University

Thierry Pénard

Université de Rennes I - Faculte de Sciences Economiques; Centre de Recherche en Économie et Management (CREM); Armorican Mole for Research on the Information Society and Uses of the Internet

Date Written: August 23, 2016

Abstract

How are prices and market outcomes determined on peer-to-peer platforms? More importantly, how should we expect price-setting and demand behavior to change as these markets mature? We provide the first empirical analysis of the world’s leading carsharing platform, BlaBlaCar. Our econometric model explicitly accounts for the joint determination of price and quantity demanded and finds that pricing decisions evolve as drivers gain experience with the platform. More-experienced drivers set lower prices and, controlling for price, sell more seats. Our interpretation is that more-experienced drivers on BlaBlaCar learn to lower their prices as they gain experience. Further, we find that driver demographics matter. The demographic characteristic with the quantitatively largest effect is for drivers with an Arabic-sounding name, for whom there is meaningfully lower demand, despite the fact that these drivers set lower prices. In total, our results suggest that peer-to-peer markets such as BlaBlaCar share some characteristics with other types of peer-to-peer markets such as eBay but remain a unique and rich setting in which there are many new insights to be gained.

Keywords: Sharing economy, Peer-to-Peer markets, Reputation, Discrimination, Carsharing

JEL Classification: J15, L14, L86

Suggested Citation

Farajallah, Mehdi and Hammond, Robert G. and Pénard, Thierry, What Drives Pricing Behavior in Peer-to-Peer Markets? Evidence from the Carsharing Platform BlaBlaCar (August 23, 2016). Available at SSRN: https://ssrn.com/abstract=2828046 or http://dx.doi.org/10.2139/ssrn.2828046

Mehdi Farajallah

ESC Rennes School of Business ( email )

Rue Robert d'arbrissel, 2
Rennes, 35000
France

Robert G. Hammond (Contact Author)

North Carolina State University ( email )

Raleigh, NC 27695-8110
United States

HOME PAGE: http://www4.ncsu.edu/~rghammon/

Thierry Pénard

Université de Rennes I - Faculte de Sciences Economiques ( email )

7, Place Hoche
35000 Rennes
France

Centre de Recherche en Économie et Management (CREM) ( email )

7 place Hoche
Rennes, Bretagne 35065
France

Armorican Mole for Research on the Information Society and Uses of the Internet ( email )

France

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