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Scarcity and market design: How effective matching can promote the peer-to-peer sharing economy

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  • Pal, Debdatta

Abstract

Scarcity is an essential issue in service marketing. This study examined scarcity in a game-theoretic setting. It focused on the role of customer evaluations, through satisfaction ratings, on a technology-enabled peer-to-peer sharing economy platform in achieving stable provider–user matching. The model shows that an appropriate market design employing a user-proposing version of Gale and Shapley's (1962) deferred acceptance algorithm for a ride-sharing platform where many users approach a few providers can help avoid congestion and ensure stable matching. To manage scarcity, the model uses a customer satisfaction rating system that modifies the widely used batch matching algorithm by matching highly rated riders much faster than their low-rated peers. A platform's ability to offer time-bound stable matching for highly-rated users during scarcity is likely to help it maintain a competitive edge.

Suggested Citation

  • Pal, Debdatta, 2024. "Scarcity and market design: How effective matching can promote the peer-to-peer sharing economy," Technological Forecasting and Social Change, Elsevier, vol. 208(C).
    • Handle: RePEc:eee:tefoso:v:208:y:2024:i:c:s0040162524004840
    DOI: 10.1016/j.techfore.2024.123686
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    References listed on IDEAS

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    More about this item

    Keywords

    Scarcity; Market design; Sharing economy;
    All these keywords.

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory

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