Sharing Platforms in Emerging Markets: The Role of Human Intermediaries

Problem definition: In emerging markets, sharing economy platforms that connect customers with independent service providers often operate in environments with low digital literacy and small, fragmented demand. To address these challenges, such platforms often rely on human intermediaries, known as booking agents, to collect demand from individual customers and submit the aggregated demand on the platform. The presence of such agents requires the platform to set not only the customer price and provider wage but also the agent wage to coordinate supply and demand. This paper analyzes the platform’s pricing and wage decisions and examines how the presence of booking agents affects the surplus of providers, customers, and the platform. Methodology/results: We model a platform involving providers, customers, and booking agents and characterize the platform’s optimal price, wages, and equilibrium outcomes. Our analysis yields several actionable insights. First, a larger provider pool can make it optimal for the platform to raise agent wages while lowering customer prices, even if this combination may reduce the platform’s commission. Second, platforms may find it optimal to pair surge pricing with increased agent wages and decreased provider wages, departing from the conventional strategy of pairing surge pricing with increased provider wages. Finally, whereas the presence of booking agents increases provider earnings by enabling more demand to be served, it may not always benefit customers or the platform. Nevertheless, these agents lead to a “win-win-win” outcome when agents’ demand aggregation cost is moderate or when providers incur high fixed costs in serving colocated customers. Managerial implications: Our findings highlight how platforms should respond to different supply and demand conditions in the presence of booking agents and inform when the use of booking agents generates value for all stakeholders. Our insights have informed changes in the practice of our industry partner, Hello Tractor.

Supplemental Material: The online appendix is available at https://doi.org/10.1287/msom.2024.1217.