Taxing Digital Advertising Revenue
Abstract
We propose a model of a social media platform in which platform's profit, consumer surplus and users' participation all depend on the platform's choice of data extraction intensity. We use this framework to analyze the implications of alternative business models (Pure Advertising; Pure Subscription; Freemium), and to provide insights into recent proposals to introduce a tax on digital advertising revenue. Our analysis highlights the important role of policy complementarity, and how the effectiveness of a tax approach crucially depends on the business model in place.
About this workshop
The Digital Regulation workshop is an online seminar series focused on digital activities and their regulation.
This working group is developing a joint approach in order to establish a reasoned position on digital regulation in the context of current European (and American) initiatives. In particular, it is considering how to implement responsible governance while allowing for innovation. The issue of the effectiveness of public action and how it relates to competitiveness constraints is also central.
More information can be found on the website of the Chair Governance and Regulation.