Abstract
On social media platforms, unsafe and unlawful materials might hurt advertisers creating ``brand safety issues''. We study the incentive for an ad-funded platform to moderate unsafe content and its impact on market outcomes. We find that both the optimal ad price and content moderation effort are non-monotonic in the cost of moderating content and in the advertiser gains from moderation. When platforms compete for user attention, content moderation decreases as competition intensifies, so hurting further advertisers. Finally, taxation of digital revenues induces a lax moderation policy, whereas taxation of user activity on the platform induces more stringent moderation
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