- American Economic Journal: Microeconomics (Forthcoming)
We model digital platforms as attention brokers that have proprietary information about their
users' product preference and sell targeted ad space to retail product industries. Retail producers—incumbents or entrants—compete for access to this attention bottleneck. We discuss when
increased concentration among attention brokers results in a tightening of the attention bottleneck,
leading to higher ad prices, fewer ads being sold to entrants, and lower consumer welfare in the
product industries. The welfare effect is characterized in terms of patterns of individual usage across
platforms. A merger assessment that relies on aggregate platform usage alone can be highly biased.
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