Influencer Cartels

Marit Hinnosaar and Toomas Hinnosaar

Papers from arXiv.org

Abstract: Social media influencers account for a growing share of marketing worldwide. We demonstrate the existence of a novel form of market failure in this advertising market: influencer cartels, where groups of influencers collude to increase their advertising revenue by inflating their engagement. Our theoretical model shows that influencer cartels can improve consumer welfare if they expand social media engagement to the target audience, or reduce welfare if they divert engagement to less relevant audiences. Drawing on the model's insights, we empirically examine influencer cartels using novel datasets and machine learning tools, and derive policy implications.

Date: 2024-05, Revised 2024-11
New Economics Papers: this item is included in nep-big, nep-com, nep-ind, nep-mic and nep-pay
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http://arxiv.org/pdf/2405.10231 Latest version (application/pdf)

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Working Paper: Influencer Cartels (2024)
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