A simple model of online marketing, production, profit and growth

Biswajit Mandal, Labani Roy Chakraborty and Alapan Sanyal
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Labani Roy Chakraborty: Visva-Bharati University, India
Alapan Sanyal: Visva-Bharati University, India

Theoretical and Applied Economics, 2024, vol. XXXI, issue 4(641), Winter, 53-66

Abstract: We build an optimization model to decipher the effects of digitalization in trading or marketing. The basic model uses Cobb -Douglas production function to argue that a shift from offline to online may induce increase in profit and subsequent economic growth. The factor-intensity of trading has a role in this context. Additionally, night time utilization due to digitalization further strengthens our results. The extended model with a CES production function gives similar results. However, revenue and cost implications are not same in these two cases. Nevertheless, the essence of the basic results holds true even in a more generalized case.

Keywords: digitalisation; selling; output; profit; growth. (search for similar items in EconPapers)
Date: 2024
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