Addictive Platforms

We study competition for consumer attention in which platforms can sacrifice service quality for attention. A platform can choose the "addictiveness" of 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 harms consumers. In particular, if attention is scarce, increased competition reduces consumer welfare because business stealing incentives induce platforms to choose high addictiveness. Restricting consumers’ platform usage may reduce addictiveness and improve consumer welfare. A platform's ability to charge for service can decrease addictiveness, but the welfare implication is ambiguous