Pricing Control and Regulation on Online Service Platforms
76 Pages Posted: 8 Nov 2021 Last revised: 24 Jun 2022
Gerard P Cachon
The Wharton School - Operations, Information and Decisions Department
Tolga Dizdarer
University of Pennsylvania, The Wharton School, Operations & Information Management Department, Students
Gerry Tsoukalas
University of Pennsylvania - The Wharton School; Boston University; Luohan Academy
Date Written: June 22, 2022
Abstract
Online service platforms enable customers to connect with a large population of independent servers and operate successfully in many sectors, including transportation, lodging, and delivery, among others. We study how prices are chosen and fees are collected on the platform. The platform could assert full control over pricing despite being unaware of the servers' costs (e.g., ride sharing). Or the platform could allow unfettered price competition among the servers (e.g., lodging). This choice influences both the amount of supply available and the overall attractiveness of the platform to consumers. When the platform collects revenue via a commission or a per-unit fee, neither price delegation strategy dominates the other. However, the platform's best payment structure is simple and easy to implement - it is merely the combination of a commission and a per-unit fee (which can be negative, as in a subsidy). Furthermore, this combination enables the delegation of price control to the servers, which may assist in the classification of the servers as contractors rather than employees. A similar approach can be used to maximize profits by fully disintermediated platforms (i.e., no central owner), such as those enabled by blockchain technology.
Keywords: blockchain, decentralized pricing, gig economy, platforms, revenue management, smart contracts
JEL Classification: D82, D86, L1, L11, L2, L8, L9, O3, K2
Suggested Citation: Suggested Citation
Gerard P Cachon

The Wharton School - Operations, Information and Decisions Department ( email )
Philadelphia, PA 19104
United States
Tolga Dizdarer
University of Pennsylvania, The Wharton School, Operations & Information Management Department, Students ( email )
Philadelphia, PA 19104
United States
Gerry Tsoukalas (Contact Author)

University of Pennsylvania - The Wharton School ( email )
3641 Locust Walk
Philadelphia, PA 19104-6365
United States
Boston University ( email )
595 Commonwealth Avenue
Boston, MA 02215
United States
Luohan Academy ( email )
No. 556, Xixi Road, Z Space
Xihu District
Hangzhou, Zhejiang 310013
China
Do you have a job opening that you would like to promote on SSRN?
Paper statistics
Related eJournals
-
Economics of Networks eJournal
Economics of Networks eJournal
Subscribe to this free journal for more curated articles on this topic
FOLLOWERS2,735PAPERS14,429This Journal is curated by:Nicholas Economides at New York University - Leonard N. Stern School of Business - Department of Economics -
Cyberspace Law eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS2,056PAPERS11,903This Journal is curated by:Peter Swire at Georgia Institute of Technology - Scheller College of Business, Jonathan L. Zittrain at Harvard Law School and Harvard Kennedy School of Government, Kalie Mayberry at Harvard University - Harvard Law School -
Contracts & Commercial Law eJournal
Contracts & Commercial Law eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS1,442PAPERS10,651This Journal is curated by:George G. Triantis at Stanford Law School -
Entrepreneurship & Economics eJournal
Entrepreneurship & Economics eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS1,344PAPERS11,263 -
Entrepreneurship & Marketing eJournal
Entrepreneurship & Marketing eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS1,230PAPERS1,842 -
Cryptocurrency Research eJournal
Cryptocurrency Research eJournal
Subscribe to this free journal for more curated articles on this topic
FOLLOWERS1,144PAPERS1,552 -
IO: Productivity, Innovation & Technology eJournal
IO: Productivity, Innovation & Technology eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS1,067PAPERS29,765 -
IO: Regulation, Antitrust & Privatization eJournal
IO: Regulation, Antitrust & Privatization eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS1,009PAPERS22,904 -
IO: Theory eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS921PAPERS15,247 -
Revenue & Yield Management eJournal
Revenue & Yield Management eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS814PAPERS460 -
Operations Management eJournal
Operations Management eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS798PAPERS2,736 -
Technology, Operations Management & Production eJournal
Technology, Operations Management & Production eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS774PAPERS1,546 -
Microeconomics: Production, Market Structure & Pricing eJournal
Microeconomics: Production, Market Structure & Pricing eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS759PAPERS16,710 -
Law & Economics eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS500PAPERS13,852This Journal is curated by:Ronald J. Gilson at Stanford Law School, A. Mitchell Polinsky at Stanford Law School -
Economics of Innovation eJournal
Economics of Innovation eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS349PAPERS19,782 -
Management of Innovation eJournal
Management of Innovation eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS304PAPERS7,195 -
Innovation & Management Science eJournal
Innovation & Management Science eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS288PAPERS7,149 -
Innovation Law & Policy eJournal
Innovation Law & Policy eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS263PAPERS28,631 -
Information Systems & Economics eJournal
Information Systems & Economics eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS231PAPERS14,088This Journal is curated by:Erik Brynjolfsson at National Bureau of Economic Research (NBER) -
Decision-Making in Economics eJournal
Decision-Making in Economics eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS171PAPERS6,003 -
Urban Transportation eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS64PAPERS1,306