What Drives Pricing Behavior in Peer-to-Peer Markets? Evidence from the Carsharing Platform BlaBlaCar
By Mehdi Farajallah (ESC Rennes School of Business), Robert G. Hammond (North Carolina State University) & Thierry Pénard (Université de Rennes)
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.
Full Article: Social Science Research Network