Flowers and Bees: Spatial Network Effects in the Adoption of a Sharing-Economy Platform

51 Pages Posted: 28 Nov 2023 Last revised: 24 Jan 2024

Date Written: October 30, 2023

Abstract

This paper empirically analyzes spatial network effects in the adoption of a car-sharing platform that connects consumers with individual car owners. Car locations are pinned on a map, and consumers travel to rent them. We thus develop a model of platform adoption by both types of participants (i.e. consumers and providers), which accommodates information asymmetry and spatial network effects across locations. We apply it to data at the earliest stage of the platform and find that proximity and consumer mobility between locations play a significant role in the network effects of existing providers on consumers. The effects of added providers in one location on consumer adoptions in other locations vary widely by location pair and are highly asymmetric, due to local characteristics and flows of consumers. In contrast, existing consumers have a limited impact on provider adoptions. Through seeding experiments, we investigate how the geographic distribution of initial participants impacts the platform diffusion and find that targeting the supply side in big cities leads to the highest platform growth. We also use our parameter estimates to measure the long-term impact of a local promotional campaign and show that it is mostly local despite spatial network effects.

Keywords: Sharing economy, Platform adoption, Diffusion models, Network effects, Continuous- time models

Suggested Citation

Stourm, Ludovic and Albuquerque, Paulo, Flowers and Bees: Spatial Network Effects in the Adoption of a Sharing-Economy Platform (October 30, 2023). HEC Paris Research Paper No. MKG-2023-1492, Available at SSRN: https://ssrn.com/abstract=4617274 or http://dx.doi.org/10.2139/ssrn.4617274

Ludovic Stourm (Contact Author)

HEC Paris ( email )

1 rue de la Liberation
Jouy-en-Josas Cedex, 78351
France

Paulo Albuquerque

INSEAD ( email )

Boulevard de Constance
77305 Fontainebleau Cedex
France

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