How much freedom should an Online Marketplace app give users with regards to the tags they can add to their products/services?

I'd probably be inclined to avoid tags altogether and instead prompt users to write more engaging descriptions, firstly, but also to provide comprehensive navigation, secondly. Good descriptions serve the user, the platform and the end-user. The focus then becomes on making sure that search works flawlessly which is coupled together with good navigation. If categories and sub-categories are available to users then they should be able to find a spot that really works for their product or service.

My justification for avoiding tags is that you've discovered the problem with them.

You can let users create them themselves, which becomes a mess. Moderation becomes necessary, there's five different tags for the same 'tag' and the most relevant one becomes difficult to distinguish. Users learn to game the tag system.

OR

You can create a predefined set of tags for users to use, which also becomes a mess. Users don't always have the most relevant tags available to them. You end up with decade-long lists of tags that aren't relevant to all users. You end up having to create additional tags over time.

Caveat: This perspective isn't based on anything other than my own feelings. I've never really liked tags much. I never use them when browsing marketplaces. Your users could react differently and could feel differently about them.

/r/UXDesign Thread