Measuring Substitution Patterns in the Attention Economy: An Experimental Approach

Substitution patterns are a crucial input to antitrust analysis, but measuring them for free digital products has proved difficult due to lack of price variation. I measure substitution patterns by installing software on experimental participants’ Android phones that restricts access to Instagram or YouTube – generating variation in choice sets – and monitoring how participants reallocate their time. I find that participants substitute to multiple product categories in both restrictions, but also substantially to nondigital activities. These results imply that using product characteristics as proxy for relevant markets may incorrectly specify the relevant set of substitutes in these contexts.