Platform Governance and the Rural-Urban Divide: Sellers’ Responses to Design Change

Platform companies use design changes to govern their sellers. The success of a design change depends on sellers’ responses, which are influenced by the local environment. Our study focuses on an important aspect of the local environment – rural versus urban. Using data from a leading e-commerce platform, we find that relative to urban sellers, rural sellers were particularly poor at adjusting to a major design change. This also resulted in a persistent performance gap. We attribute these misaligned responses to rural sellers’ lack of local access to rich information. This study shows that sellers’ local heterogeneity generates equivocal responses and carries unintended consequences for platform governance. It also enriches our understanding of digital inequality in the platform economy.