University / Organisation : Paris University Dauphine-PSL

Paper or project ? project

Title : How price sensitive are carpool passengers? Evidence from fee changes

File : Download

Abstract : Platform literature suggests that such a fee usually has an imperfect path-through -- the supply side may take the fee into account and adjust their pricing behavior. A technical difficulty is to estimate the path-through rate to calibrate the surplus shared between the supply side, the demand side, and the platform. In our case, we benefit from a unique setting of an exogenous commission change. Suppliers (carpooling drivers) who have set their prices before the change are locked in with the prices, while the late entrants are free to adjust. In terms of empirical design, we conduct a quasi-experiment design and use the trip-level data to examine the potential impact of this exogenous fee shock on trip popularity.