Abstract: This paper examines the influence of the gig economy on a monopoly's optimal product line design. We consider a service monopoly facing demand uncertainty, trade-offs between advantages and disadvantages of the gig economy and suggest an optimal product line design. We find that under the gig economy optimal employment strategies can be categorized as Pure Flexibility, Mixed Flexibility and No Flexibility according to the relative working efficiency and the unit labor cost in the gig economy. Furthermore, the optimal service level depends on the final demand realization and the relative efficient cost of flexible hiring. When the final demand realization is good or the relative efficient cost of flexible hirng is low, the gig economy will drive up service levels. If the final demand realization is bad and the relative efficient cost of flexible hirng is high, the gig economy will drive down service levels. Finally, the firm invests more in human resources under the gig economy, but it may drive down consumer surplus and social welfare.

Key words: Gig economy, Service product line design