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This study analyzes the current spreading effect and light extraction efficiency (LEE) of lateral and vertical light-emitting diodes (LEDs). Specifically, this study uses a fully 2-D model that solves drift-diffusion and Poisson equations to investigate current flow paths and radiative recombination regions. The ray-tracing technique was used to calculate the LEE of the top surface. First, this study discusses the current spreading effect of the lateral and conventional vertical LED and determines the efficiency droop even with a transparent conducting layer. Different electrode configurations in the vertical LED were tested to optimize the current spreading effect, which, in turn, suppresses the carrier leakage and mitigates the efficiency droop under high injection conditions. This study also discusses the wall-plug efficiency in overall cases to identify the design rules for higher power conversion efficiency.