IDEAS home Printed from https://ideas.repec.org/a/oup/restud/v92y2025i3p1837-1881..html
   My bibliography  Save this article

“You Will:” A Macroeconomic Analysis of Digital Advertising

Author

Listed:
  • Jeremy Greenwood
  • Yueyuan Ma
  • Mehmet Yorukoglu

Abstract

An information-based model is developed where traditional and digital advertising finance the provision of free media goods and affect price competition. Digital advertising is directed toward specific consumers while traditional advertising is undirected. The equilibrium is suboptimal. Media goods, if valued by the consumer, are under provided with both types of advertising. Additionally, traditional advertising is excessive because it is undirected. The tax-cum-subsidy policy that overcomes these inefficiencies is characterized. The model is calibrated to the U.S. economy. Through the lens of the calibrated model, digital advertising increases welfare significantly. The welfare gain from the optimal policy is much smaller than the gain from digital advertising.

Suggested Citation

  • Jeremy Greenwood & Yueyuan Ma & Mehmet Yorukoglu, 2025. "“You Will:” A Macroeconomic Analysis of Digital Advertising," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 92(3), pages 1837-1881.
    • Handle: RePEc:oup:restud:v:92:y:2025:i:3:p:1837-1881.
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1093/restud/rdae067
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    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:oup:restud:v:92:y:2025:i:3:p:1837-1881.. 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: Oxford University Press (email available below). General contact details of provider: https://academic.oup.com/restud .

    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.