Competition in Digital Markets

The advent of digital markets is affecting all economic activities.

From how consumers discover and purchase products to how firms connect to consumers and other businesses, from the way workers and firms learn about each other to the way labor itself is organized, digital platforms are creating new opportunities and challenges for individuals, businesses and governments.The tendency for digital platforms to assume a “winner takes all” form, where the market tips to a situation of highly concentrated oligopoly or even monopoly, puts into question whether the forces of free market competition are enough to guarantee that this concentration does not harm consumers and businesses.This proposal describes three empirical projects that will advance the frontier of our understanding of the role of competition in digital markets.1) The Role of Intermediaries in Digital Advertising.

This part studies how competition in digital advertising is evolving due to the emergence of intermediaries.

Using data on both the links between advertisers and intermediaries and on internet search ad campaigns, it estimates a model of many-to-many matching to examine how advertisers and intermediaries select each other.2) Competition and Defaults in Online Search. This part studies how consumer bias interacts with competition in internet search.

Exploiting a public intervention mandating changes to the default settings for search engines on Android smartphones in Europe, it studies how the design of default options impacts search engine market shares, search quality and advertiser behaviour.3) The Price of Privacy in Digital Markets. Competition in digital markets involves combinations of prices and forms of monetization of users’ data.

Using data from the smartphone app market, this part estimates a structural model of demand and supply to quantify the interplay between prices, ads and privacy and to counterfactually evaluate interventions limiting firms’ ability to monetize users' data.