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The Gig Economy and Two-Sided Markets
Subject area: Arts, Social Sciences and Humanities · Area of research: Microeconomics
Abstract
Globally, the gig economy has rapidly transformed labor markets with Kenya emerging as a key player in Africa as a result of its high mobile penetration and digital financial services. This paper conducts a microeconomic analysis of the gig economy as a two-sided market, examining platform dynamics, pricing strategies, and welfare implications in Kenya. Using theoretical models and empirical data, the study explores how digital platforms like Uber, Bolt, and airbnb booking apps mediate labor supply and demand, the efficiency of matching mechanisms and the regulatory challenges. The findings suggest that while the gig economy enhances labor flexibility and income opportunities, it also raises concerns about worker exploitation, income volatility, and market power concentration. Policy recommendations are proposed to foster fair competition and worker protections while sustaining innovation.
Keywords
Gig Economy, Two-Sided Markets, Platform Economics, Labor Markets, Kenya, Labor Regulations
References
[1] Armstrong, M. (2006). Competition in two- sided markets. RAND Journal of Economics, 37(3), 668-691
[2] Mbiti, I., & Weil, D. N. (2021). Digital labor markets in Africa: Evidence from Uber in Kenya (NBER Working Paper No. 29451). National Bureau of Economic Research.
[3] Rochet, J.-C., & Tirole, J. (2003). Platform competition in two-sided markets. Journal of the European Economic Association, 1(4), 990- 1029.
[4] Communications Authority of Kenya. (2024). Quarterly sector statistics report Q1 2024.
[5] Kenya National Bureau of Statistics. (2023). Economic survey 2023.
[6] National Transport Safety Authority. (2023). Digital mobility platform compliance report. Government of Kenya.
[7] Kago, J., & McKenzie, D. (2023). Digital ethnography of platform work in Nairobi [Unpublished manuscript]. Department of Economics, University of Nairobi.
How to cite this paper
@article{1709652,
author = {Alfrin Moni Opiyo, Dr. Yasin Kuso Ghabon},
title = {The Gig Economy and Two-Sided Markets},
journal = {Iconic Research And Engineering Journals},
year = {2025},
volume = {9},
number = {1},
pages = {929-934},
issn = {2456-8880},
url = {https://www.irejournals.com/formatedpaper/1709652.pdf},
abstract = {Globally, the gig economy has rapidly transformed labor markets with Kenya emerging as a key player in Africa as a result of its high mobile penetration and digital financial services. This paper conducts a microeconomic analysis of the gig economy as a two-sided market, examining platform dynamics, pricing strategies, and welfare implications in Kenya. Using theoretical models and empirical data, the study explores how digital platforms like Uber, Bolt, and airbnb booking apps mediate labor supply and demand, the efficiency of matching mechanisms and the regulatory challenges. The findings suggest that while the gig economy enhances labor flexibility and income opportunities, it also raises concerns about worker exploitation, income volatility, and market power concentration. Policy recommendations are proposed to foster fair competition and worker protections while sustaining innovation.},
keywords = {Gig Economy, Two-Sided Markets, Platform Economics, Labor Markets, Kenya, Labor Regulations},
month = {July},
}