Content moderation and advertising in social media platforms

48 Pages Posted: 2 Apr 2020 Last revised: 26 Jan 2024

See all articles by Leonardo Madio

Leonardo Madio

University of Padua - Department of Economics and Management; CESifo (Center for Economic Studies and Ifo Institute)

Martin Quinn

Erasmus University Rotterdam (EUR)

Date Written: January 24, 2024

Abstract

We study the incentive of an ad-funded social media platform to curb the presence of unsafe content that entails reputational risk to advertisers. We identify conditions for the platform not to moderate unsafe content and demonstrate how the optimal moderation policy depends on the risk the advertisers face. The platform is likely to under-moderate unsafe content relative to the socially desirable level when both advertisers and users have congruent preferences for unsafe content and to over-moderate unsafe content when advertisers have conflicting preferences for unsafe content. Finally, to mitigate negative externalities generated by unsafe content, we study the implications of a policy that mandates binding content moderation to online platforms and how the introduction of taxes on social media activity and social media platform competition can distort the platform's moderation strategies.

Keywords: Online advertising; Content Moderation; User-generated Content; Platforms; UGC.

JEL Classification: L82; L86; M3.

Suggested Citation

Madio, Leonardo and Quinn, Martin, Content moderation and advertising in social media platforms (January 24, 2024). Available at SSRN: https://ssrn.com/abstract=3551103 or http://dx.doi.org/10.2139/ssrn.3551103

Leonardo Madio (Contact Author)

University of Padua - Department of Economics and Management ( email )

Via del Santo, 33
Padova, 35123
Italy

HOME PAGE: http://www.leonardomadio.eu

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Martin Quinn

Erasmus University Rotterdam (EUR) ( email )

Rotterdam
Netherlands

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
1,011
Abstract Views
3,443
Rank
42,551
PlumX Metrics