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The Quality of Interactions in Competition Between Social Media Platforms

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  • Eisdorfer Ido

    (Coller School of Management, 26745 Tel Aviv University , Tel Aviv, Israel)

Abstract

Social media platforms are content-based platforms in which agents invest efforts to produce and share content while interacting with one another. The central question involves the trade-off between interaction quantity and content quality, and its impact on competition between an incumbent platform with a focal advantage and a high-quality new entrant seeking market entry. The study focuses on an agent’s utility function, examining the interplay between these factors and exploring strategies for platform decision-makers to maximize profits and benefits for their agents. The findings show that a high-quality non-focal platform has a strategic advantage in winning the market when agents prioritize content quality over the quantity of interactions. Policymakers should take into account the quality-driven impact on market efficiency and entry barriers.

Suggested Citation

  • Eisdorfer Ido, 2023. "The Quality of Interactions in Competition Between Social Media Platforms," Review of Network Economics, De Gruyter, vol. 22(4), pages 185-240.
    • Handle: RePEc:bpj:rneart:v:22:y:2023:i:4:p:185-240:n:1002
    DOI: 10.1515/rne-2023-0068
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    More about this item

    Keywords

    social media platforms; network extremities; platform competition; focal platform; divide-and-conquer; quality of interactions;
    All these keywords.

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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