Reducing food waste through digital platforms: A quantification of cross-side network effects

Abstract

To fight food waste, retail stores have begun selling perishable food close to the expiration date at discounted prices. To render this form of last-minute discounting effective, digital platforms have been developed with the major aim to connect local retail stores and their consumers by sharing information about these discounts. To sustain digital platforms, platform leaders need to ensure both consumers and retail stores remain active on it. To provide platform leaders with advice on how to create a sustainable digital platform, we examine how retail store activity on the digital platform affects consumer activity, and vice versa (also known as cross-side network effects). By combining a PVAR model and an impulse response function, along with data from a digital platform aimed at food waste reduction, we find that the effect of consumer activity on retail store activity is stronger and more long-lasting than the effect of retail store activity on consumer activity. We discuss the implications of our findings for both retail stores and digital platform leaders.