When delivery comes to town: The effect of digital distribution platform emergence on industry structure and competition

Deskripsi

We explore how the emergence of digital distribution platforms (DDPs), platforms that facilitate transactions between consumers and incumbents, affects industry structure and competition. Studying the effect of delivery platforms on restaurants in the United States from 2012 to 2018, we show that DDP emergence increases exit and concentration and reduces business dynamism. We provide speculative evidence that these changes are driven by both an increase in inter-firm competition as well as increased margin pressure from the platform. We show that strategic positioning shapes how establishments experience such changes to competition and that DDP emergence can cause a revaluation of resources within an establishment's business model. This research documents how technology-enabled intermediaries can disrupt an industry by altering the basis of competition.