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The institutional environment and gig platform transaction cost solutions

Published online by Cambridge University Press:  25 January 2024

Svetlana Golovanova ,
Eduardo Pontual Ribeiro Open the ORCID record for Eduardo Pontual Ribeiro [Opens in a new window] ,
Evgeny Styrin  and
Ivan Makarov Open the ORCID record for Ivan Makarov [Opens in a new window]
Svetlana Golovanova
Affiliation:
National Research University Higher School of Economics, Nizhny Novgorod, Russian Federation
Eduardo Pontual Ribeiro*
Affiliation:
Institute of Economics, Federal University of Rio de Janeiro, Rio de Janeiro, Brazil
Evgeny Styrin
Affiliation:
Digital Transformation in Public Administration Laboratory, National Research University Higher School of Economics, Moscow, Russian Federation
Ivan Makarov
Affiliation:
Digital Transformation in Public Administration Laboratory, National Research University Higher School of Economics, Moscow, Russian Federation
*
Corresponding author: Eduardo Pontual Ribeiro; Email: [email protected]
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Abstract

A growing number of labour market participants transact through gig platforms. This choice should reflect a reduction in transaction costs for platform users, compared to costs they meet when using alternative modes of governance. We exploit a unique cross-platform, cross-country data set of gig platform users to test the impact of the institutional environment in one of its dimensions – the strictness of labour market regulation (LMR) – on the ability of gig platforms to reduce users' transaction costs. According to our findings, the regulation indicator of both the user and platform countries influences transaction costs for platform users, even controlling for platform and user characteristics. The platform appears to reduce transaction costs most when users face stricter or weaker LMR, in a U-shaped effect. In the former case, the platform may provide an escape from labour regulations when hiring for tasks, while in the latter case, the platform can economize on the usual transaction costs of private contracting by administrating some types of users' activities.

Keywords

institutionslabour market regulationlabour platformstransaction costsD02J44M55
Type
Research Article
Information
Journal of Institutional Economics , Volume 20 , 2024 , e12
Copyright
Copyright © The Author(s), 2024. Published by Cambridge University Press on behalf of Millennium Economics Ltd.

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