Service Refusal in the Sharing Economy: Evidence of the New-User Bias

Abstract

Service refusal (i.e., providers refuse to provide service to users), which has become an increasingly serious problem in the sharing economy, remains unexplored. Through the application of rigorous identification strategies on a rich data set from a large sharing economy platform, this study empirically investigates providers’ service refusal decisions. The results suggest that service providers on the investigated platform are more likely to refuse service to new users than to repeat-purchase users. This phenomenon is weakened by the increased business tenure and business scale of the providers (i.e., their tenure on the platform and the size of their user base, respectively), but is strengthened by an increase in their refusal experience (i.e., refusal ratio). Our empirical findings provide important contributions to the literature on the sharing economy and online service management. The findings also provide insightful managerial implications to online service providers, users, and platform managers in the sharing economy.

Keywords: Service Refusal, Online Service Providers, New Users, Repeat-Purchase Users, Sharing Economy