arXiv:2405.10231econ.GN
Influencer Cartels
Early discovery. Linked by one identifiable commenter. This paper is outside the main ranking; a mention is not an endorsement.
Abstract
Social media influencers account for a growing share of marketing worldwide. We demonstrate the existence of a novel form of market failure in the 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.
Figure 1 in this post, showing algorithmically enforced collusion in the cartel, is shocking to me as someone who hasn't spent any time on Instagram. The authors of the blog post describe their analysis in detail in the "companion paper" on arXiv: https://arxiv.org/abs/2405.10231
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