Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/252042 
Year of Publication: 
2022
Series/Report no.: 
CESifo Working Paper No. 9525
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
We identify features of interactions on online platforms that make an ad-funded business model attractive for the platform, but also for consumers. We then show that ad-funded platforms heavily rely on data for their ability to create value for their users. Formally, we show that data restrictions may trigger a switch away from ad-funded to fee-funded model, resulting in a loss of consumer welfare. We also argue that restricting the effort to increase data quality weakens competition to the detriment of consumers.
Subjects: 
ad-funded business model
data aggregation restrictions
targeted advertising
platform competition
merchant competition
transaction costs
JEL: 
K21
L22
L40
M37
Document Type: 
Working Paper
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