Influencer Cartels

37 Pages Posted: 18 Feb 2021 Last revised: 21 Jun 2022

See all articles by Marit Hinnosaar

Marit Hinnosaar

University of Nottingham

Toomas Hinnosaar

University of Nottingham - School of Economics

Date Written: June 17, 2022


Influencer marketing is a large and growing but mostly unregulated industry. The majority of influencers are not paid based on their marketing campaigns’ success. Instead, their prices are based on engagement (number of likes and comments). This gives incentives for fraudulent behavior—for inflating engagement. We study influencer cartels, where groups of influencers collude to increase engagement to improve their market outcomes. Our theoretical model shows that such cartels mitigate the free-rider problem and may increase or decrease welfare, depending on the quality of induced engagement. We use a novel dataset of Instagram influencer cartels and confirm that the cartels increase engagement as intended. Importantly, we show that engagement from non-specific cartels is of lower quality, whereas engagement from topic-specific cartels may be as good as natural engagement. Therefore topic-specific cartels may sometimes be welfare-improving, whereas typical non-specific cartels hurt everyone.

Keywords: collusion, influencers, cartels, free-riding, commitment, cosine similarity, LDA, marketing

JEL Classification: L41, C72, L86, M31, D26

Suggested Citation

Hinnosaar, Marit and Hinnosaar, Toomas, Influencer Cartels (June 17, 2022). Available at SSRN: or

Marit Hinnosaar (Contact Author)

University of Nottingham ( email )

University Park
Nottingham, NG8 1BB
United Kingdom

Toomas Hinnosaar

University of Nottingham - School of Economics ( email )

University Park
Nottingham, NG7 2RD
United Kingdom

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