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Responsible users and platform competition: A computational model.

Evangelos Katsamakas1, J Manuel Sanchez-Cartas2

  • 1Gabelli School of Business, Fordham University, 140 W. 62nd Street, New York, NY, 10023, USA.

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Summary
This summary is machine-generated.

Responsible users, who consider Corporate Social Responsibility (CSR) in their choices, drive down platform prices and profits. The impact of these responsible users on market competition is significant, regardless of preference origin.

Keywords:
Corporate Social Responsibility (CSR)Platform competitionResponsible platformResponsible user

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Area of Science:

  • Business Strategy
  • Digital Economics
  • Consumer Behavior

Background:

  • Corporate Social Responsibility (CSR) is increasingly vital for digital platforms.
  • Consumer and policymaker scrutiny of platform social responsibility is growing.
  • The impact of 'responsible users' on platform competition remains under-explored.

Purpose of the Study:

  • To introduce and model the concept of responsible users in platform competition.
  • To analyze how user CSR preferences influence platform strategic behavior and market dynamics.
  • To investigate the effects of market asymmetries on platform pricing and profitability.

Main Methods:

  • Development of a computational model for platform price competition.
  • Inclusion of user-defined CSR preferences within the model.
  • Exploration of various market asymmetry scenarios.

Main Results:

  • User CSR preferences exert pro-competitive effects, reducing equilibrium prices and profits.
  • The magnitude of price and profit reduction is contingent on the scale of CSR preferences.
  • The origin of user CSR preferences is less critical than their expression in market outcomes.

Conclusions:

  • Integrating responsible users into platform competition models offers new insights.
  • CSR preferences can significantly alter market structures and profitability for digital platforms.
  • Findings have practical implications for platform managers and users, highlighting the influence of socially conscious decision-making.