IDEAS home Printed from https://ideas.repec.org/p/hal/wpaper/hal-04616676.html
   My bibliography  Save this paper

The Macroeconomics of Free Digital Services

Author

Listed:
  • Mathilde Aubouin

    (EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique, GAEL - Laboratoire d'Economie Appliquée de Grenoble - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - UGA - Université Grenoble Alpes - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - UGA - Université Grenoble Alpes)

  • Lionel Ragot

    (EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)

Abstract

Digital technology has enabled the rise of free digital services financed by advertising. These services are increasingly popular and enable a few digital firms to generate significant revenue, although GDP does not directly consider them. This paper presents a growth model with digital services providers collecting household data in exchange for their services, which are used to sell targeted advertising to traditional firms. It enables us to study the impacts of this sector on key macroeconomic aggregates and welfare within the American context. Our results highlight that enhanced activity among large providers (new entry, greater efficiency in producing service quality or advertising) positively impacts the economy. Data collection enables small providers to compete with large ones, which benefit from greater user attention. Household preferences, such as sensitivity to privacy, also play a role, potentially hindering the free digital services sector's economic impact.

Suggested Citation

  • Mathilde Aubouin & Lionel Ragot, 2024. "The Macroeconomics of Free Digital Services," Working Papers hal-04616676, HAL.
    • Handle: RePEc:hal:wpaper:hal-04616676
    Note: View the original document on HAL open archive server: https://hal.science/hal-04616676
    as

    Download full text from publisher

    File URL: https://hal.science/hal-04616676/document
    Download Restriction: no
    ---><---

    Other versions of this item:

    More about this item

    Keywords

    Economic growth; Digital economy; Data economy; Privacy; Advertising;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:wpaper:hal-04616676. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.