Consumer Demand and Market Competition with Time-Intensive Goods

Joseph Goodman, Lancelot Henry de Frahan, Justin Holz, John List, Niall MacMenamin, Evan C. McKay, Magne Mogstad, Sally Sadoff and Hal Sider

No 34743, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We leverage Becker’s time allocation theory to examine consumer demand and market competition for time-intensive goods. The Beckerian model predicts higher diversion ratios for goods with substantial time shares and those with high time costs relative to monetary prices. Applying this model to data from two field experiments, we analyze demand for Facebook and Instagram, focusing on substitution patterns across online activities and offline time use. Our findings indicate that users exhibit low elasticity to ad load, the primary user cost, and that time shares and time costs significantly influence diversion ratios. We explore the implications for user costs and benefits on these platforms and assess the potential impact of a Federal Trade Commission-proposed de-merger of Facebook and Instagram.

JEL-codes: C93 D11 D12 L4 L86 (search for similar items in EconPapers)
Date: 2026-01
Note: IO
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Working Paper: Consumer Demand and Market Competition with Time-Intensive Goods (2025)
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