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Data (r)evolution - The economics of algorithmic search and recommender services

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  • Budzinski, Oliver
  • Gänßle, Sophia
  • Lindstädt-Dreusicke, Nadine

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.

Suggested Citation

  • Budzinski, Oliver & Gänßle, Sophia & Lindstädt-Dreusicke, Nadine, 2021. "Data (r)evolution - The economics of algorithmic search and recommender services," Ilmenau Economics Discussion Papers 148, Ilmenau University of Technology, Institute of Economics.
    • Handle: RePEc:zbw:tuiedp:148
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    References listed on IDEAS

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    More about this item

    Keywords

    algorithmic search and recommender services; data economics; media economics; internet economics; digital economy; cultural economics; competition; antitrust; industry regulation; digital business ecosystems;
    All these keywords.

    JEL classification:

    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
    • K24 - Law and Economics - - Regulation and Business Law - - - Cyber Law
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics
    • Z10 - Other Special Topics - - Cultural Economics - - - General

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