Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/261269 
Year of Publication: 
2022
Series/Report no.: 
Bank of Canada Staff Working Paper No. 2022-16
Publisher: 
Bank of Canada, Ottawa
Abstract: 
We study competition for consumer attention, in which platforms can sacrifice service quality for attention. A platform can choose the "addictiveness" of its service. A more addictive platform yields consumers a lower utility of participation but a higher marginal utility of allocating attention. We provide conditions under which increased competition can harm consumers by encouraging platforms to offer low-quality services. In particular, if attention is scarce, increased competition reduces the quality of services because business stealing incentives induce platforms to increase addictiveness. Restricting consumers' platform usage may decrease addictiveness and improve consumer welfare. A platform's ability to charge for its service can also decrease addictiveness.
Subjects: 
Economic models
JEL: 
D40
L51
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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