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Consumer Demand and Market Competition with Time-Intensive Goods

Author

Listed:
  • Joseph Goodman
  • Lancelot Henry de Frahan
  • Justin E. Holz
  • John A. List
  • Niall MacMenamin
  • Evan C. McKay
  • Magne Mogstad
  • Sally Sadoff
  • Hal Sider

Abstract

We leverage Becker’s time allocation theory to examine consumer demand and market competition for time-intensive goods. The Beckerian model predicts higher diversion ratios for goods with substantial time shares and those with high time costs relative to monetary prices. Applying this model to data from two field experiments, we analyze demand for Facebook and Instagram, focusing on substitution patterns across online activities and offline time use. Our findings indicate that users exhibit low elasticity to ad load, the primary user cost, and that time shares and time costs significantly influence diversion ratios. We explore the implications for user costs and benefits on these platforms and assess the potential impact of a Federal Trade Commission-proposed de-merger of Facebook and Instagram.

Suggested Citation

  • Joseph Goodman & Lancelot Henry de Frahan & Justin E. Holz & John A. List & Niall MacMenamin & Evan C. McKay & Magne Mogstad & Sally Sadoff & Hal Sider, 2026. "Consumer Demand and Market Competition with Time-Intensive Goods," NBER Working Papers 34743, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:34743
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    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • L4 - Industrial Organization - - Antitrust Issues and Policies
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

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