118 / 2024-04-20 22:33:51

Strategic Analysis of On-demand Service Models

On-demand,auction,posted price,bargain

We consider an on-demand platform company with two business models: posted price model and auction model. The platform company chooses pure or hybrid strategy through decentralized or centralized decision-making. Service provider group divides profit with platform company based on commission rate. We first consider commission rate is given endogenously. We find that in decentralized system, any of the three schemes can be the best for the platform company and the worst for service provider group, depending on the bargaining power. However, two parties can achieve a win-win situation in hybrid strategy. In contrast, when platform company decides in a centralized way, it consistently yields higher profits compared to that in decentralized system. Depending on the bargaining power, both decision-making methods can prove advantageous for the service provider group. If platform company carries auctioning cost per auction, we obtain similar conclusions. We then consider the alternate setting where commission rate is exogenously determined. In this case, both platform company and service provider group gain more profit in centralized system. These findings, however, rely on the assumption that market competition is at a moderate level. Therefore, we further extend our model to general market substitutability by numerical analysis.