The Economics of Social Media

51 Pages Posted: 13 Feb 2024

See all articles by Guy Aridor

Guy Aridor

Northwestern University - Kellogg School of Management

Rafael Jiménez-Durán

Bocconi University; University of Chicago - George J. Stigler Center for the Study of the Economy and the State

Ro’ee Levy

Tel Aviv University

Lena Song

University of Illinois at Urbana-Champaign

Multiple version iconThere are 2 versions of this paper

Date Written: 2024

Abstract

We review the burgeoning literature on the economics of social media, which has become ubiquitous in the modern economy and fundamentally changed how people interact. We first define social media platforms and isolate the features that distinguish them from traditional media and other digital platforms. We then synthesize the main lessons from the empirical economics literature and organize them around the three stages of the life cycle of user-generated content: (1) production, (2) distribution, and (3) consumption. Under production, we discuss how incentives affect content produced on and off social media and how harmful content is moderated. Under distribution, we discuss the social network structure, algorithms, and targeted advertisements. Under consumption, we discuss how social media affects individuals who consume its content and society at large, and discuss consumer substitution patterns across platforms. Throughout the review, we delve into case studies examining the deterrence of misinformation, segregation, political advertisements, and the effects of social media on political outcomes. We conclude with a brief discussion on the future of social media.

Keywords: social media, media economics, user-generated content

JEL Classification: L820, L960, P000, D600

Suggested Citation

Aridor, Guy and Jiménez-Durán, Rafael and Levy, Ro’ee and Song, Lena, The Economics of Social Media (2024). CESifo Working Paper No. 10934, Available at SSRN: https://ssrn.com/abstract=4723727 or http://dx.doi.org/10.2139/ssrn.4723727

Guy Aridor (Contact Author)

Northwestern University - Kellogg School of Management ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

Rafael Jiménez-Durán

Bocconi University ( email )

Via Sarfatti, 25
Milan, MI 20136
Italy

University of Chicago - George J. Stigler Center for the Study of the Economy and the State ( email )

Walker Hall
Chicago, IL 60637
United States

Ro’ee Levy

Tel Aviv University ( email )

Ramat Aviv
Tel-Aviv, 6997801
Israel

Lena Song

University of Illinois at Urbana-Champaign ( email )

601 E John St
Champaign, IL Champaign 61820
United States

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
168
Abstract Views
410
Rank
48,545
PlumX Metrics