Essays on digital economics

This thesis is a collection of four research papers in the field of digital economics. The first two chapters contribute to the literature on digital piracy. While in the past digital piracy was relegated to user activity, it has now turned into a business model based on ads. The first chapter studies the effect of user adoption of ad-blocking technologies aimed at (partially or fully) stopping ads on the strategies set by legal and pirate content providers. It finds that ad-blockers alters the firms' strategies. Depending on how many ads are blocked, the copyright holder, consumers, and society can perceive ad avoidance either as a blessing or as a curse.

The second chapter studies competition between a legal content provider and several pirate alternatives. Facing a pirate ecosystem, the legal provider and the government may find it optimal to tolerate some degree of (commercial) digital piracy.

The third chapter studies the platform's incentives to undertake value-increasing investments when the value generated accrues to different sides of the market (i.e. sellers and buyers). Depending on whether sellers are enabled to join more than one platform, different results and incentives may arise. When some sellers multi-home, prices decrease to buyers and increase to sellers. Moreover, more sellers multi-home and platforms are more likely to invest.

The last chapter explores incentives for a premium provider (Superstar) to offer exclusive deals to competing platforms. When platform competition is intense, more consumers join the platform hosting the Superstar exclusively. This engenders a ripple effect on the other side: many other providers enter the market and provide exclusively their product. The welfare analysis suggests that Superstar exclusives may represent a manifestation of the competitive intensity in the market and be the first-best in the industry.