In recent years, interest in the spread of an on-demand economy, which means a transaction method of providing necessary goods and services at any time in accordance with the demand of a consumer, is increasing.

On-demand economy refers to a system of commerce or a business model for realizing it, providing the products and services that are needed at any time in response to user orders. The advent of such an on demand economy is based on the emergence and diffusion of mobile devices, and the market is being developed with a competitive edge in maximizing consumer utility, providing consumers with what they want when they want.

The emergence of an on-demand economy will create jobs and encourage households and corporations to raise income and consumption to stimulate the domestic market, which in turn will create a virtuous cycle structure that enhances dynamics not only in the service sector, but also in our economy as a whole. It is necessary to review the government’s role and tasks for the desirable diffusion of this trend.

This paper considers the on-demand economy as the same concept as the O2O(online to offline) service. The analysis of the five major(food, accommodation, home service, real estate, transportation) sectors and nine services was conducted. (food delivery, fresh food delivery, accommodation reservation, accommodation sharing, home services, real estate transactions, designated driver calls, taxi calls, vehicle sharing).

Chapter 2 predicts the demand for eight major O2O services, excluding real estate transactions, by bypassing data limits through three methods: growth model, internet search data, and consumer survey data.

According to these analytical methods, the estimated number of users of major 8 on-demand services in 2017 is about 12 million, and the transaction amount is about KRW 4.7 trillion. The number of users exceeded 18 million in 2022, and the transaction amount is expected to increase to around KRW 8 trillion by 2026~7, but there is no significant market expansion after that.

In Chapter 3, we surveyed 3,500 Korean men and women over 20 years of age who have used O2O service in the past year. We could obtain the results of various perceptions, usage patterns, intention to use in future by 9 services.

The logit model analysis of the demographic characteristics of consumers who have decided to use the nine O2O services over the past year has shown that the gender, age, internet use time and SNS use time, number of family members living together, education and income are the main variables influencing on the probability of participating in on-demand service as a consumer.

In particular, it was found that age, SNS usage time, and income were most important variables showing a significant results across the various services.

Chapter 4 analyzes the consumer preference of major attributes in virtual situations by using conjoint analysis method for food delivery app service, which is the most established on-demand service in Korea among various major on-demand services. The results of the analysis show that consumers’ preference (willingness-to-pay) is high on, protection of consumer’ reviews from suppliers, arbitration of platform operators in case of disputes, and protection of personal information.

From the results of this analysis, the following policy directions were presented.

First, the on-demand service is a new transaction type centering on mobile communications, so it is necessary to relax the related regulations. Representative regulation examples include the certificate digital signature and regulations on the use of personal information. In particular, in order to satisfy both consumer concerns and market activation, it is necessary to establish guidelines for enhancing personal information protection and support the activation of the security technology market.

In other hand, it is necessary to introduce a regulation that excludes the owner’s right to delete (or request) the consumer review. It is a real difficult situation for the platform vendors to actively intervene in the consumer’s concerns about the occurrence of the dispute, so it is necessary to propose the consumer damage relief guidelines.

In addition, government support is needed to nurture human resources and enhance technology in technologies related to big data utilization technology, artificial intelligence technology, and personal information security.

Next, it is necessary to expand the service accessibility of the selfemployed and the elderly. Self-employed can expand contact points with their customers at relatively low cost through on-demand services. However, there are also policy issue, such as the emergence of monopolist platform provider due to indirect network effects, which are inherent attributes of the platform economy. In addition, as stated in the analysis of this paper, there is a consumer preference for market dominant platform. Therefore, there is room for the government to intervene so that unfair transactions are not made on the relationship between suppliers and platforms. The government should continuously monitor the leading companies’ potential abuse of market dominance and examine the application of ex post regulation. In addition, as described in Chapter III, the characteristic of on-demand service is that the degree of utilization is highly depending on the consumer’ demographic characteristics. There is a need for a policy that enables higher age groups to benefit as consumers of on-demand services.

Finally, in Chapter Ⅱ of this study, we looked at the market size of eight major on-demand services, and the number of users for major on-demand services is fully saturated in 2028. In fact, there seems to be little market expansion since the early 2020s.

In other words, on-demand services will expand the market by creating new sectors that are unexpected. In this regard, it is necessary to make policy efforts to establish and maintain the entrepreneurial ecosystem in the O2O sector, where active business start-up is possible with various ideas and business models.