The role of digital platforms in market coordination through quality valuations. The case of restaurants

Abstract

How do digital platforms affect coordination in the restaurant market? In particular, how do they reshape firms’ positions in the quality space and their dependence on both consumers’ valuations and competitors’ choices? Focusing on the case of a widely used platform for restaurant booking and reviewing, we analyze the dine-in services market in the city of Lille, France. In line with economic sociology’s definition of markets as concrete social spaces, we frame these restaurants as a producer market in which multiple quality conventions coexist. We use sequential mixed methods and data (observations and interviews, web-scraping and business data) to show that platforms rationalize firms’ practice of observing one another as a basis for making decisions on volume and quality. The rise of digital platforms provides producers with devices that amplify their view of competitors, standardize their offerings and support the stability of their business choices over time, conditional on spatial constraints and quality choices.