Mechanism Design for Ad-Supported Platforms

Doh-Shin Jeon, Shota Ichihashi () and Byung-Cheol Kim ()
Additional contact information
Shota Ichihashi: Unknown
Byung-Cheol Kim: Unknown

Working Papers from HAL

Abstract: Many digital platforms earn revenue by selling content access and displaying ads. We study monopoly screening by a platform allocating heterogeneous content and ads to heterogeneous consumers. Advertising generates revenue and affects information rents through nuisance, which alters the platform's incentives to allocate content. The optimal mechanism balances a trade-off between advertising and rent extraction: Expanding content access increases advertising revenue but reduces sales revenue by raising information rents. The mechanism features novel distortions in content access and ad exposure, rationalizes contracts across ad-supported platforms, and explains why greater ad profitability may weaken incentives to invest in content quality.

Keywords: ad-funded platform; mechanism design; innovation; quality (search for similar items in EconPapers)
Date: 2026-09-09
Note: View the original document on HAL open archive server: https://hal.science/hal-04953707v2
References: Add references at CitEc
Citations:

Downloads: (external link)
https://hal.science/hal-04953707v2/document (application/pdf)

Related works:
Working Paper: Mechanism Design for Ad - Supported Platforms (2026)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:wpaper:hal-04953707

Access Statistics for this paper

More papers in Working Papers from HAL
Bibliographic data for series maintained by CCSD ().