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On-demand platforms and pricing: how platforms can impact the informal urban economy, evidence from Bengaluru, India
Abstract
Pricing is one of the most powerful mechanisms platform firms use to internally regulate demand and supply, withstand competitors and achieve profitability (Rochet & Triole, 2003). This article uncovers the effects that platform pricing logics have on existing labour markets within the city of Bengaluru. For this article the platform serves as the object of study, i.e. in determining earnings for service providers for various purposes (like subsidising products by (mis)matching service price and earnings) and it serves as a means to enter the service labour market as it exists in the city. This article looks at how platform service fees, with the particular set of logics of the two-sided markets and intra-capitalist competition, impact adjacent enterprises (informal, own account enterprises) providing the same services. Carpentry, electrical work and plumbing are services with a long history in the city and their breadth of service was not created as a result of the platform (compared to food delivery, for example). Rarely do minimum wage floors factor into the service fee negotiation between providers and clients. The platforms' market does have that impact, creating a standard around their base fee, undercutting the more tacit ways in which workers negotiate their service fees. This article uses ethnographic data from interviews with people working on Urban Company and Housejoy platforms in carpentry, electrical work and plumbing, collected in Bengaluru in 2017-18.
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Notes
‘Productise’ is a term used regularly in business English that refers to the processes of commerce and marketing that make something into a product which can be sold. The word has been central to how the Information Technology services industry has boomed - as software services have been packaged as products that are sold to clients. Similarly, it can be used to explain how consultants productise their expertise by creating a product or service based on their knowledge.
This is an initiative of the Government of India aiming to reduce poverty and vulnerability of poor urban households by enabling them to access gainful self-employment and skilled wage employment opportunities. Activities under this scheme including skilling programmes and tie-ups like those written about here.