Expanding Platform Capacity Through Asset Rental Programs: Design and Implications

69 Pages Posted: 7 Aug 2023

See all articles by Guiyun Feng

Guiyun Feng

Singapore Management University

Ioannis Bellos

George Mason University - Department of Information Systems and Operations Management

Deyin Ji

Singapore Management University - Lee Kong Chian School of Business

Date Written: August 4, 2023

Abstract

In recent years, the growth of on-demand platforms has been hindered by the lack of available workers. To address this challenge, platforms have been introducing short-term asset rental programs for individuals who are interested in providing services but do not own a qualifying asset or are reluctant to use their own. Different designs of such programs have been adopted with some of them discriminating between workers renting versus using their own assets by either: i) imposing restrictions on how rented assets can be used, ii) imposing a surcharge for the personal use of rented assets, or iii) offering different wages to the two pools of workers. These practices, however, have raised fairness concerns regarding the treatment of workers who do not own an asset. Motivated by these concerns and the divergent platform practices, we attempt to understand the role played by the discriminating rental policies and their implications for workers and the whole system. To that end, we develop a game-theoretic model and analyze different rental program designs. Our study reveals that if a platform discriminates by offering different wages, it should pay higher wages to the workers who rent, which challenges the prevailing practice of offering lower wages. Contrary to fairness concerns, all discriminatory designs can benefit workers and under certain conditions, can also lead to higher platform profit and more customers served. Our research provides valuable managerial insights for designing effective rental programs and a comprehensive understanding of their social impact.

Keywords: asset rental programs, on-demand platforms, platform capacity, worker welfare

Suggested Citation

Feng, Guiyun and Bellos, Ioannis and Ji, Deyin, Expanding Platform Capacity Through Asset Rental Programs: Design and Implications (August 4, 2023). George Mason University School of Business Research Paper, Available at SSRN: https://ssrn.com/abstract=4530938 or http://dx.doi.org/10.2139/ssrn.4530938

Guiyun Feng (Contact Author)

Singapore Management University ( email )

Singapore
Singapore

Ioannis Bellos

George Mason University - Department of Information Systems and Operations Management

4400 University Drive
Fairfax, VA 22030
United States

HOME PAGE: http://mason.gmu.edu/~ibellos

Deyin Ji

Singapore Management University - Lee Kong Chian School of Business

469 Bukit Timah Road
Singapore 912409
Singapore

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