The entry quality threshold setting and commission rate contract selection of a peer-to-peer service sharing platform

Purpose In recent years, some peer-to-peer (P2P) service sharing platforms have improved their service quality by setting an entry quality threshold for service providers. Considering consumers' heterogeneous preferences for service quality and commission rate, it is worth studying how to select the commission rate contract for a P2P platform under a predetermined entry quality threshold for service providers. Design/methodology/approach In this study, the platform's profit-maximizing model is constructed under two proposed contracts: unilateral commission rate contract and bilateral commission rate contract. The optimal entry quality threshold and the optimal commission rate are obtained. This study also explores the impacts of cross-side network externality and service price on a platform's optimal decisions and social welfare. Findings Results show that it is always advantageous for the platform to adopt the bilateral commission rate contract, which is closely related to the strength of cross-side network externality, service price and quality sensitivity coefficient. Under certain conditions, adopting the unilateral commission rate contract can reduce platform profit and service provider surplus, and improve consumer surplus and social welfare. Originality/value This study analyzes the unilateral commission rate contract and the bilateral commission rate contract of the platform, and discusses which contract is beneficial to the platform, consumers and service providers. In addition, this study provides a basis for the operation decision of a P2P service sharing platform and the pricing decision of service providers.