Can social media platforms charge their users?

Soumya Kanta Mishra and Sumit Sarkar

Economics Letters, 2023, vol. 233, issue C

Abstract: Traditionally social media platforms offered free service to users. The recent implementation of the pay-for-subscription model by some social media platforms motivated us to examine the equilibrium conditions under which the platforms can charge users. We model price competition between two horizontally differentiated platforms that can charge both the advertisers and users. The main results are: (i) Sufficiently strong platform preferences of the users enable the platforms to charge the users when they singlehome; (ii) Independent of parameter conditions, the platforms can charge the users when they multihome and advertisers singlehome.

Keywords: Social media; Platform competition; Horizontal differentiation; Network effect; Advertisement nuisance; Multihoming (search for similar items in EconPapers)
JEL-codes: D43 L11 L13 L82 L86 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:233:y:2023:i:c:s016517652300441x

DOI: 10.1016/j.econlet.2023.111415

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