Customer Voice on Two-Sided Platforms: The Effect of Surge Pricing on Customer Complaints

Linli Xu (), Yanhao “Max” Wei () and Yi Zhu ()
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Linli Xu: Carlson School of Management, University of Minnesota, Minneapolis, Minnesota 55455
Yanhao “Max” Wei: Marshall School of Business, University of Southern California, Los Angeles, California 90089
Yi Zhu: Carlson School of Management, University of Minnesota, Minneapolis, Minnesota 55455

Management Science, 2025, vol. 71, issue 8, 6729-6745

Abstract: Two-sided platforms (e.g., ride-sharing, freelance labor, and lodging) match customers and service providers. Customers can voice their satisfaction level through review/rating systems, which the platforms use to monitor and screen service providers. However, customers may misdirect complaints about platform-level features toward individual service providers. We examine the extent and consequences of this issue in the context of a large ride-sharing platform. We focus on surge pricing as the platform-level feature. Our findings are as follows. First, for an average trip, surge pricing makes it 1.13 times more likely for the driver to receive a complaint (either a low rating or a formal complaint). Second, complaints negatively impact a driver’s future income. Surge-induced complaints offset about 23% of a driver’s immediate gain from the surged fare. Third, after the platform adopted a policy to cap the magnitude of surge prices, the effect of surge on customer complaints reduced. The policy also led to more usage of the platform. The results suggest a close interaction between the pricing and review systems on ride-sharing platforms. More broadly, they point to the importance for online two-sided platforms to identify and address customer complaints about platform-level features that may have been misdirected to service providers.

Keywords: customer complaints; review system; ride-sharing; driver income; surge pricing; two-sided platforms (search for similar items in EconPapers)
Date: 2025
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