Attention Oligopoly

American Economic Journal: Microeconomics, Forthcoming

40 Pages Posted: 21 Jun 2018 Last revised: 5 Jun 2021

See all articles by Andrea Prat

Andrea Prat

Columbia Business School - Finance and Economics; Centre for Economic Policy Research (CEPR)

Tommaso M. Valletti

Imperial College Business School; Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 2 versions of this paper

Date Written: May 25, 2021

Abstract

We model digital platforms as attention brokers that have proprietary information about their users' product preference 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.

Keywords: media mergers, attention oligopoly

JEL Classification: L13

Suggested Citation

Prat, Andrea and Valletti, Tommaso M., Attention Oligopoly (May 25, 2021). American Economic Journal: Microeconomics, Forthcoming , Available at SSRN: https://ssrn.com/abstract=3197930 or http://dx.doi.org/10.2139/ssrn.3197930

Andrea Prat (Contact Author)

Columbia Business School - Finance and Economics ( email )

3022 Broadway
New York, NY 10027
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Tommaso M. Valletti

Imperial College Business School ( email )

South Kensington Campus
Exhibition Road
London SW7 2AZ, SW7 2AZ
United Kingdom

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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