Language, Internet and Platform Competition
57 Pages Posted: 20 Aug 2020
Date Written: April 5, 2020
The dominance of English language content on the Internet raises a question of how consumer bilingualism in a given country affects the amount of home language content and the country's welfare. We address this question by studying two-sided market competition between a foreign and a domestic content distribution platform in a small open economy. On the one hand, bilingualism has the benefit of increasing cross-side network externalities by increasing consumer concentration on the foreign platform, which increases the amount of home language content. On the other hand, bilingualism exposes home language content to competition from foreign language content and softens platform competition, which reduces the amount of home language content. We find that bilingualism mostly increases consumer surplus but can reduce domestic producer surplus. The welfare effect of taxing the foreign platform is also analyzed.
Keywords: Language, Bilingualism, Platforms, Two-sided Market, Content Producers, International Trade
JEL Classification: D43, F12, L13, L86
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