Document de travail

Search Diversion and Platform Competition

Andrei Hagiu et Bruno Jullien

Résumé

Platforms use search diversion in order to trade off total consumer traffic for higher revenues derived by exposing consumers to unsolicited products (e.g. advertising). We show that the entry of a platform competitor leads to higher (lower) equilibrium levels of search diversion relative to a monopoly platform when the degree of horizontal differentiation between platforms is intermediate (low). On the other hand, more intense competition between active platforms (i.e. less differentiation) leads to less search diversion. When platforms charge consumers fixed access fees, all equilibrium levels of search diversion under platform competition are equal to the monopoly level, irrespective of the nature of competition. Furthermore, platforms that charge positive (negative) access fees to consumers have weaker (stronger) incentives to divert search relative to platforms that cannot charge such fees. Finally, endogenous affiliation on both sides (consumers and advertising) leads to stronger incentives to divert search relative to the one-sided exogenous affiliation (vertical integration) benchmark, whenever the marginal advertiser derives higher profits per consumer exposure relative to the average advertiser.

Remplacé par

Andrei Hagiu et Bruno Jullien, « Search Diversion and Platform Competition », International Journal of Industrial Organization, vol. 33, mars 2014, p. 48–60.

Référence

Andrei Hagiu et Bruno Jullien, « Search Diversion and Platform Competition », TSE Working Paper, n° 13-431, septembre 2013.

Voir aussi

Publié dans

TSE Working Paper, n° 13-431, septembre 2013