Prioritization vs. congestion on platforms: evidence from Amazon's Twitch.tv

This article studies the efficient use of prioritizing certain content over others in Amazon's Twitch.tv, a live streaming service, taking into account the trade-off between entry and congestion. I specify and estimate supply and demand models for live video, and a congestion model. Using technological shocks, I identify congestion costs for content providers and their consumers. Using shocks in prioritization, I identify its benefits. With estimated preferences and technological parameters, I construct counterfactuals. Without congestion, demand doubles. A supply-side Pigouvian tax on traffic is preferred to a demand-side one. Without prioritization, consumer welfare drops by 10%.

Automated summary

This article examines the efficient prioritization of content in Twitch.tv, considering the trade-off between entry and congestion, and identifies the impact of different policies on consumer welfare through supply and demand models and congestion models.