Competitiveness in the Delivery App Industry

Juan Camilo Castillo (), Alejandro Sabal () and Jaume Vives-i-Bastida ()
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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

No 26-06, Working Papers from NET Institute

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.

Keywords: delivery platforms; two-sided markets; bargaining; exclusivity; anchor restaurants (search for similar items in EconPapers)
JEL-codes: C78 L14 L83 L86 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2026-10
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