The next RITM Economics Seminar will take place on Monday 2 March, in room Imbert (Jean Monnet – 54 boulevard Desgranges – 92330 Sceaux) from 11:00 to 12:00. Léonardo Madio (UCLouvain CORE / Toulouse School of Economics) will present “User-generated content, strategic moderation, and advertising” coauthored with Martin Quinn.”
Social networks act as “attention brokers” and stimulate the production of user-generated content to increase user activity on a platform. When ads are displayed in unsuitable environments (e.g., disputed material), advertisers may face a backlash. This article studies the incentive for an ad-funded platform to invest in content moderation. We present several results. Firstly, there is a U-shaped relation between ad prices and brand safety: the highest ad price arises for full or no content moderation. Secondly, content moderation decreases when platform competition intensifies and this configures a market failure. We show that these results provide important implications for platform regulation and highlight that well-intended policy measures might lead to the spread of harmful content.