Attention Oligopoly
Year: 2022
Type: article
Abstract: We model digital platforms as attention brokers that have proprietary information about their users’ product preferences and sell targeted ad space to retail product industries. Retail producers—incumbents or entrants—compete for access to this attention bottleneck. We discuss when increased concentration among attention brokers results in a tightening of the attention bottleneck, leading to higher ad prices, fewer ads being sold to entrants, and lower consumer welfare in the product industries. The welfare effect is characterized in terms of patterns of individual usage across platforms. A merger assessment that relies on aggregate platform usage alone can be highly biased. (JEL D43, D83, G34, L81, L86, M37)
DOI: 10.1257/mic.20200134
Authors: Andrea Prat, Tommaso Valletti
Institutions: Columbia University, Imperial College London
Language: English
Subfield: Strategy and Management
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W4288032976