In this web content, the authors explore the impact of social media on consumer welfare. They argue that as more people join platforms like TikTok and Instagram, the value for both users and non-users can change. The authors conducted a large-scale online experiment with 1,000 college students to measure consumer welfare. They found that users would need to be paid $59 to deactivate TikTok and $47 to deactivate Instagram if others continued to use their accounts. However, users would also be willing to pay to have others, including themselves, deactivate these platforms. The authors also discuss the concept of network effects and explore similar spillover effects in the luxury goods and technology industries. These findings suggest the existence of a “social media trap” for some users and highlight the need for regulators to assess the impact of different products on consumer welfare.
https://bfi.uchicago.edu/insight/research-summary/when-product-markets-become-collective-traps-the-case-of-social-media/