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

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.