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Pricing Decisions for an On-Demand Crowdsourced Delivery Platform With Differentiated Service Levels | IEEE Journals & Magazine | IEEE Xplore

Pricing Decisions for an On-Demand Crowdsourced Delivery Platform With Differentiated Service Levels


Abstract:

Motivated by the diverse services provided by various on-demand service platforms to satisfy customers’ different needs, we investigate the pricing of an on-demand crowds...Show More

Abstract:

Motivated by the diverse services provided by various on-demand service platforms to satisfy customers’ different needs, we investigate the pricing of an on-demand crowdsourced delivery platform (CDP) with differentiated service levels. Using a multinomial logit model, we propose a two-sided market framework for investigating the pricing decisions of a CDP with two differentiated service levels under a general variable commission scheme and a fixed-rate commission scheme. The results show that 1) the two-sided pricing mechanism (price and wage decisions) allows the supply to match the demand for different service levels, except when the CDP adopts a fixed-rate commission scheme; and 2) depending on the magnitude of the fixed commission rate, adopting a fixed-rate commission scheme has different impacts on the equilibrium outcomes. We also extend our model by including the commission scheme and multiple service levels. The results show that 1) the CDP can achieve a higher optimal profit under the courier classification scheme than under a benchmark variable commission scheme, and 2) offering senders and couriers diversified service levels benefits the CDP. This article provides CDP practitioners with a quantitative tool for pricing for service-level menus.
Published in: IEEE Transactions on Engineering Management ( Volume: 71)
Page(s): 14350 - 14364
Date of Publication: 27 August 2024

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I. Introduction

The rapid development of network technology and the sharing economy in recent years has greatly facilitated the emergence and expansion of on-demand crowdsourced delivery platforms (CDPs). Especially during the COVID-19 outbreak, on-demand CDPs experienced rapid growth, accumulated large user bases, and provided considerable convenience to consumers. The total value of the global sharing economy was US15 billion in 2014 and is predicted to increase to US335 billion by 2025.

Accessed: 14 December 2023. [Online]. Available: https://www.statista. com/statistics/830986/value-of-the-global-sharing-economy/

CDPs such as Dada, FlashEx, and Instacart not only act as a link between supply and demand but, more importantly, coordinate supply and demand in real-time [1]. Given the advantages of crowdsourced delivery in reducing costs and improving speed and responsiveness, the CDPs make full use of available technological advantages to integrate resources continuously to match supply and demand better [2]. Consequently, the on-demand CDP has recently become a popular research topic in operations management.

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References

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