Moderation as Strategy: How Content Decisions Shape Ideological Differentiation in Digital Platform Competition

Rachel Khaw
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Rachel Khaw: Monash University

Warwick-Monash Economics Student Papers from Warwick Monash Economics Student Papers

Abstract: This thesis develops a theoretical model of digital platform competition in which moderation choices endogenously generate ideological differentiation. Competing platforms decide which content providers to host, trading off advertising revenues against moderation costs, while consumers sort by ideological proximity and content variety. In equilibrium, breadth competition cancels out, leaving ideological tilt as the key dimension of differentiation. Polarisation emerges as the most robust equilibrium, maximising platform profits but welfare-reducing for moderates, while generalism is socially optimal but privately fragile. By modelling ideology as the outcome of moderation intensity rather than an exogenous stance, the paper clarifies how moderation incentives shape polarisation, welfare, and regulatory trade-offs.

Keywords: Digital platforms; content moderation; ideological differentiation; polarisation; welfare; industrial organisation. JEL classifications: L13; L82; D43; D72 (search for similar items in EconPapers)
Date: 2026
New Economics Papers: this item is included in nep-com, nep-gth and nep-mic
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