The Quality of Interactions in Competition Between Social Media Platforms

Eisdorfer Ido ()
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Eisdorfer Ido: Coller School of Management, 26745 Tel Aviv University , Tel Aviv, Israel

Review of Network Economics, 2023, vol. 22, issue 4, 185-240

Abstract: Social media platforms are content-based platforms in which agents invest efforts to produce and share content while interacting with one another. The central question involves the trade-off between interaction quantity and content quality, and its impact on competition between an incumbent platform with a focal advantage and a high-quality new entrant seeking market entry. The study focuses on an agent’s utility function, examining the interplay between these factors and exploring strategies for platform decision-makers to maximize profits and benefits for their agents. The findings show that a high-quality non-focal platform has a strategic advantage in winning the market when agents prioritize content quality over the quantity of interactions. Policymakers should take into account the quality-driven impact on market efficiency and entry barriers.

Keywords: social media platforms; network extremities; platform competition; focal platform; divide-and-conquer; quality of interactions (search for similar items in EconPapers)
JEL-codes: L1 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1515/rne-2023-0068

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