Addictive Platforms
Shota Ichihashi, Byung-Cheol Kim
Management Science · 2023 · Volume 69 · Issue 2
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. This paper was accepted by Joshua Gans, business strategy.
Keywords
digital platforms, platform competition, attention, addiction
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