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Measuring Markets for Network Goods

Author

Listed:
  • Leonardo Bursztyn
  • Matthew Gentzkow
  • Rafael Jimenez-Duran
  • Aaron Leonard
  • Filip Milojevic
  • Christopher Roth
  • Matthew Gentzkow

Abstract

Market definition is essential for antitrust analysis, but challenging in settings with network effects, where substitution patterns depend on changes in network size. To address this challenge, we conduct an incentivized experiment to measure substitution patterns for TikTok, a popular social media platform. Our experiment, conducted during a time of high uncertainty about a potential U.S. TikTok ban, compares changes in the valuation of other social apps under individual and collective TikTok deactivations. Consistent with a simple framework, the valuations of alternative social apps increase more in response to a collective TikTok ban than to an individual TikTok deactivation. Our framework and estimates highlight that individual and collective treatments can even lead to qualitatively different conclusions about which alternative goods are substitutes.

Suggested Citation

  • Leonardo Bursztyn & Matthew Gentzkow & Rafael Jimenez-Duran & Aaron Leonard & Filip Milojevic & Christopher Roth & Matthew Gentzkow, 2025. "Measuring Markets for Network Goods," CESifo Working Paper Series 12049, CESifo.
    • Handle: RePEc:ces:ceswps:_12049
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination

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