The Impact of Dynamic Two-Sided Platform Pricing on Fairness Perception in the Sharing Economy

From an economic perspective, dynamic pricing seems to be the profit maximizing pricing strategy for consumer-to-consumer (C2C) sharing platforms because it allows balancing supply and demand over time. Based on distributive justice and equity theory we investigate how two characteristics of dynamic pricing, namely 'fee changes over time' and 'fee differences across consumer groups', influence fairness perception and intention to share of consumers. Using a laboratory experiment, we find that fee differences between lenders and borrowers is the dominant source of negative fairness perception, which in turn results in a lower intention to share, especially for the consumer group that is charged with a higher fee. Consequently, C2C sharing platforms have to be aware of this negative effect from fairness perception when they implement a dynamic two-sided platform pricing strategy to maximize profits.