Data (R)Evolution – The Economics of Algorithmic Search and Recommender Services

33 Pages Posted: 18 Feb 2021

See all articles by Oliver Budzinski

Oliver Budzinski

Ilmenau University of Technology

Sophia Gaenssle

Ilmenau University of Technology

Nadine Lindstädt

Pforzheim University

Date Written: January 1, 2021

Abstract

The paper analyses the economics behind algorithmic search and recommender services, based upon personalized user data. Such services play a paramount role for online services such as marketplaces (e.g. Amazon), audio streaming (e.g. Spotify), video streaming (e.g. Netflix, YouTube), app stores, social networks (e.g. Instagram, Tik Tok, Facebook, Twitter) and many more. We start with a systematic analysis of search and recommendation services as a commercial good, highlighting the changes to these services by the systematic use of algorithms. Then we discuss benefits and risk for welfare arising from the widespread employment of algorithmic search and recommendation systems. In doing so, we summarize the existing economics literature and go beyond its insights, including highlighting further research desires. Eventually, we derive regulatory and managerial implications drawing on the current state of academic knowledge.

Keywords: algorithmic search and recommender services, data economics, media economics, internet economics, digital economy, cultural economics, competition, antitrust, industry regulation, digital business ecosystems

JEL Classification: L86, L40, K21, K23, K24, L13, L51, L82, M21, Z10

Suggested Citation

Budzinski, Oliver and Gaenssle, Sophia and Lindstädt, Nadine, Data (R)Evolution – The Economics of Algorithmic Search and Recommender Services (January 1, 2021). Available at SSRN: https://ssrn.com/abstract=3769386 or http://dx.doi.org/10.2139/ssrn.3769386

Oliver Budzinski (Contact Author)

Ilmenau University of Technology ( email )

Ilmenau, D-98684
Germany

HOME PAGE: http://www.tu-ilmenau.de/wth

Sophia Gaenssle

Ilmenau University of Technology ( email )

Ilmenau, D-98684
Germany

Nadine Lindstädt

Pforzheim University ( email )

Tiefenbronner Str. 65
75175 Pforzheim
Germany

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