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Platform contents

Renault, Régis (2014-01), Platform contents, CESifo Area Conference on Applied Microeconomics, 2014-02, Munich, Allemagne

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am14-Renault.pdf (1.463Mb)
Type
Communication / Conférence
Date
2014-01
Conference title
CESifo Area Conference on Applied Microeconomics
Conference date
2014-02
Conference city
Munich
Conference country
Allemagne
Pages
21
Metadata
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Author(s)
Renault, Régis
Abstract (EN)
A monopoly platform hosts advertisers who compete on a market for horizontally differentiated products. These products may be either mass market products that appeal broadly to the entire consumer population or niche products that are tailored to the tastes of some particular group. Consumers search sequentially through ads incurring a surfing cost of moving to the next ad. They may click on an ad at some cost, which provides all relevant information and the opportunity to buy. The platform chooses which information is in an ad and may be observed by consumers before they click. It also selects the level of sur ng costs and click costs and charges a per click ad price. Higher surfing and click costs and more mass market advertising reduces the platform's attractiveness but enhances advertisers' market power. If ads are uninformative, the platform optimally attracts only niche advertising. This is however not feasible if search costs cannot be made su ciently low, in which case both types of products are advertised. The platform benefits from requiring firms to advertise prices, only if it is unable to attract consumers with uninformative ads. The analysis is extended to allow advertising to include product information and allow the platform to provide non advertising content (e.g. entertainment or news).
Subjects / Keywords
Internet platforms; Internet; Consumers; Mass markets products; Advertising
JEL
L86 - Information and Internet Services; Computer Software
L81 - Retail and Wholesale Trade; e-Commerce
M37 - Advertising

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