CAREER: Regulating On-Demand Delivery Platforms

Boston College, Chestnut Hill MA

Investigators

Abstract

This project investigates the regulation of emerging platform organizations in the restaurant industry. Digital technologies have substantially changed the landscape of the industry, with online delivery becoming an essential revenue source for restaurants. Delivery platforms collect customer orders via a mobile app and have drivers pick up the food and deliver it to customers. These platforms, however, have had an uneasy partnership with restaurants. Delivery platforms possess strong power over independent restaurants and set platform fees as high as 30% to extract most of the surplus created on their platforms. Although there are heated debates on whether and how to regulate delivery platforms, the lack of empirical studies hinders the progress towards effective decision making. This project investigates the impact of delivery platforms on restaurants and the implications for decision makers. The findings from this project advance our knowledge on how on-demand platforms and other powerful platforms create value for businesses, organizations, and our society. This project also enhances our knowledge about how to regulate powerful platforms. Specifically, this project has three objectives: 1) Investigating the Realities of On-Demand Delivery. Whether restaurants benefit from delivery platforms, or what types of restaurants are more likely to benefit (e.g., independent vs. chain) are fundamental questions of importance to restaurant owners and decision makers; 2) Investigating the Effectiveness of Current Regulatory Frameworks. More than a dozen cities and states have recently imposed regulations that cap the commissions that delivery platforms can charge. This project investigates if such regulations are effective, and the promises and perils of implementing such regulations; 3) Informing the Design of Optimal Regulatory Frameworks. Building on the findings from 1) and 2), this project seeks to inform the design of optimal regulatory frameworks that improve total social welfare, balancing restaurant revenue, consumer surplus, and the sustainability of the on-demand delivery business. This award reflects NSF's statutory mission and has been deemed worthy of support through evaluation using the Foundation's intellectual merit and broader impacts review criteria.