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Addictive Platforms

Shota Ichihashi and Byung-Cheol Kim (bkim34@ua.edu)
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Byung-Cheol Kim: Department of Economics, Finance, and Legal Studies, Culverhouse College of Business, University of Alabama, Tuscaloosa, Alabama 35487

Management Science, 2023, vol. 69, issue 2, 1127-1145

Abstract: We study competition for consumer attention in which platforms can sacrifice service quality for attention. A platform can choose the “addictiveness” of its service. A more addictive platform yields consumers a lower utility of participation but a higher marginal utility of allocating attention. We provide conditions under which increased competition can harm consumers by encouraging platforms to offer low-quality services. In particular, if attention is scarce, increased competition reduces the quality of services because business-stealing incentives induce platforms to increase addictiveness. Restricting consumers’ platform usage may decrease addictiveness and improve consumer welfare. A platform’s ability to charge for its service can also decrease addictiveness.

Keywords: digital platforms; platform competition; attention; addiction (search for similar items in EconPapers)
Date: 2023
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http://dx.doi.org/10.1287/mnsc.2022.4392 (application/pdf)

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Working Paper: Addictive Platforms (2022) Downloads
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