American Economic Journal:
Microeconomics
ISSN 1945-7669 (Print) | ISSN 1945-7685 (Online)
Attention Oligopoly
American Economic Journal: Microeconomics
vol. 14,
no. 3, August 2022
(pp. 530–57)
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.Citation
Prat, Andrea, and Tommaso Valletti. 2022. "Attention Oligopoly." American Economic Journal: Microeconomics, 14 (3): 530–57. DOI: 10.1257/mic.20200134Additional Materials
JEL Classification
- D43 Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection
- D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
- G34 Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance
- L81 Retail and Wholesale Trade; e-Commerce
- L86 Information and Internet Services; Computer Software
- M37 Advertising
There are no comments for this article.
Login to Comment