The Impact of Supply-side Subscriptions on the Gig Economy
Two-sided gig economy platforms face persistent challenges in retaining a reliable supplier base, aligning service provider availability with customer demand, and mitigating moral hazard. One emerging response is supply-side subscription models, where providers pay a fixed fee in exchange for reduced commissions and priority access to jobs. We study the equilibrium impact of such a model using data from a major Indian at-home services platform that shifted from a pure commission scheme to a two-part tariff in one focal category, while maintaining commission-only pricing in five control categories. The new scheme combines a monthly subscription fee with a lower per-job commission and preferential assignment for subscribed providers. Using a census of transactions, assignments, subscription choices, and provider histories, we construct weekly market-level aggregates for 36 city--category markets over 58 weeks and estimate the impact of the program with a synthetic differences-in-differences design. The subscription program induces substantial supply-side sorting: the active provider base in the treated category shrinks by roughly 50\%, as less loyal providers churn following the program’s introduction. At the same time, provider-related outcomes improve in aggregate: the share of active providers increases by about 9.5 percentage points, deliveries and revenue per provider rise by roughly 35--36\%, and the incidence of jobs with extra payments---a key moral hazard margin---declines by 7.7 percentage points, while average service ratings remain unchanged. On the demand side, the platform raises prices and experiences a moderate decline in job requests and fulfillment, leaving total platform revenue in the treated category approximately unchanged. Overall, supply-side subscriptions can reconfigure the provider base toward more committed providers and improve behavioral outcomes, even when they do not increase short-run platform revenues.
Bhoomija Ranjan
Bhoomija Ranjan is a Senior Lecturer of Marketing at Monash University. She received her PhD and MS in Business Administration from the University of Rochester. Dr. Ranjan's research primarily focuses on understanding how firms and individuals make decisions through quantitative modeling techniques. Her research spans retail, advertising and digital platforms. Her work integrates econometric modelling with strategic insights, examining diverse topics such as retail advertising, geospatial competition and economics of digital platforms. She has published in leading journals including the Journal of Marketing Research and the Journal of the Academy of Marketing Science.