Responsible users and platform competition: A computational model

Abstract

Corporate Social Responsibility (CSR) is an increasingly important topic in business, especially in the context of digital platforms where consumers and policymakers care about the social responsibility of platforms. This paper introduces the concept of responsible users, defined as users who make decisions considering their CSR preferences in platform settings. However, how responsible users may affect platform strategic behavior and competition is unclear. Therefore, we propose a computational model of platform price competition that considers the presence of responsible users. We find that CSR preferences have pro-competitive effects that reduce prices and profits in equilibrium. However, this effect depends on how large CSR preferences can be. We also explore several market asymmetries and clarify their implication for platform price structures and profits. Furthermore, we find that it only matters that users express their CSR preferences, regardless of how those preferences are generated. By integrating the responsible user concept into platform competition, our work contributes to both platform competition and CSR literature. We discuss practical implications for platform users and managers and future research opportunities.