Welfare Implications of Democratization in Content Creation

55 Pages Posted: 20 Dec 2023

See all articles by Tianxin Zou

Tianxin Zou

University of Florida - Warrington College of Business Administration

Zijun (June) Shi

Hong Kong University of Science & Technology (HKUST)

Yue Wu

University of Pittsburgh - Katz Graduate School of Business

Date Written: December 12, 2023

Abstract

The rise of content-creation technologies such as generative artificial intelligence (G-AI) has reshaped the way people produce and consume content. These technologies democratize content creation, enabling a broader array of inexperienced individuals to generate content that rivals the quality produced by professionals. In this paper, we adopt a game-theoretic model to study how the democratization of content creation affects consumer welfare. While the content-democratization technology can assist low-quality creators in improving their content quality or creation efficiency, it can precipitate a flood of low-quality content in the market and crowd out high-quality content, leading to losses in consumer and social welfare. The welfare losses occur when the content quality or creation efficiency of the low-quality creators is at a low level. Furthermore, we show that the negative welfare impact is more likely to be observed when fewer creators can access the content-democratization technology, when the technology produces content with relatively low horizontal variation, when content platforms can effectively screen content based on quality and promote high-quality content, and when consumers are averse to technology-generated content. In addition, we demonstrate the robustness of results in more general scenarios. Our results can explain seemingly conflicting observations regarding content democratization in different industries.

Keywords: generative AI, ChatGPT, content creation, attention competition, consumer welfare, game theory

JEL Classification: O33, L82, L86

Suggested Citation

Zou, Tianxin and Shi, Zijun (June) and Wu, Yue, Welfare Implications of Democratization in Content Creation (December 12, 2023). Available at SSRN: https://ssrn.com/abstract=4662282 or http://dx.doi.org/10.2139/ssrn.4662282

Tianxin Zou (Contact Author)

University of Florida - Warrington College of Business Administration ( email )

Gainesville, FL 32611
United States

Zijun (June) Shi

Hong Kong University of Science & Technology (HKUST) ( email )

Clearwater Bay
Kowloon, 999999
Hong Kong

Yue Wu

University of Pittsburgh - Katz Graduate School of Business ( email )

Pittsburgh, PA 15260
United States

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