Skill and Capacity Management in Large-scale Service Marketplaces

Customers who need quick resolutions for their temporary problems are increasingly seeking help in largescale, Web-based service marketplaces. Due to the temporary nature of the relations between customers and service providers (agents) in these marketplaces, customers may not have an opportunity to assess the ability of an agent before their service completion. On the other hand, the moderating firm has a more sustained relationship with agents, and thus it can provide customers with more information about the abilities of agents through skill screening mechanisms. The main goal of this paper paper is to explore how the moderating firm may use its skill screening tools while making skill and capacity management decisions. Surprisingly, we show that the dynamics of the service marketplace may force the moderating firm to limit the potential service capacity even when supply is significantly scarce. We also show that the impact of the marketplace dynamics is alleviated when the firm can isolate its business with one particular customer type from the other customer types, especially when skills required to serve di↵erent customer needs are correlated. Thus, the firm prefers to utilize the potential service capacity if skills of an agent are correlated.