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Indirect Network Effect and Spillover Effect in Food Delivery Platforms

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  • Lee, Gong

Abstract

I analyze how the food delivery market's indirect network effect and spillover effect influence the spread of food delivery platforms in different counties. This study finds that there is a positive local indirect network effect and a positive spillover effect in the adoption of the platform by examining the food delivery platform market in South Korea as of 2020. As food delivery platforms secure consumers who use them, more restaurants on the other side of a two-sided market adopt such platforms (indirect network effect). The spillover effect would allow other restaurants in a region to become more likely to adopt food delivery platforms if there are a greater number of restaurants in the region that use such platforms. This study contributes to the comprehension of technology diffusion and the marketing strategies of platform providers by providing empirical evidence of both effects.

Suggested Citation

  • Lee, Gong, 2022. "Indirect Network Effect and Spillover Effect in Food Delivery Platforms," KDI Journal of Economic Policy, Korea Development Institute (KDI), vol. 44(4), pages 25-42.
    • Handle: RePEc:zbw:kdijep:267885
    DOI: 10.23895/kdijep.2022.44.4.25
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    More about this item

    Keywords

    Network Effect; Spillover Effect; Food Delivery Platforms; COVID-19; South Korea;
    All these keywords.

    JEL classification:

    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • L87 - Industrial Organization - - Industry Studies: Services - - - Postal and Delivery Services
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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