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Competitiveness in the Delivery App Industry

Author

Listed:
  • Juan Camilo Castillo

    (Department of Economics, University of Pennsylvania, Philadelphia, Pennsylvania, and NBER)

  • Alejandro Sabal

    (Department of Economics, University of Chicago, Chicago, Illinois)

  • Jaume Vives-i-Bastida

    (Department of Economics, New York University, New York, New York)

Abstract

Delivery platforms provide an easy way for small restaurants to reach a large customer base with little upfront investment. However, small restaurants often face high commissions, while large, anchor restaurants receive preferential rates. We study competition in the delivery app industry and the economic forces behind this market structure. We develop a model in which platforms set commissions for small restaurants and negotiate over listing and commissions with anchor restaurants. Restaurants then set prices, and consumers choose which platforms to install and which restaurants to order from. We estimate our model using order-level data from a major European delivery app. We then run counterfactual simulations to understand what drives high commissions, measure how surplus is split among market participants, and evaluate the effects of additional platform entry.

Suggested Citation

  • Juan Camilo Castillo & Alejandro Sabal & Jaume Vives-i-Bastida, 2026. "Competitiveness in the Delivery App Industry," Working Papers 26-06, NET Institute.
    • Handle: RePEc:net:wpaper:2606
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    File URL: http://www.netinst.org/Castillo_26-06.pdf
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    Keywords

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    JEL classification:

    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory

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