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Influencer promoting a certain product or service causes an increase in consumer demand, shifting the demand curve to the right.

This increases both equilibrium price and quantity sold.

Graph 1 shows demand shifting from D to D₁, with a new equilibrium moving from (Q, P) to (Q₁, P₁)

This outcome is dependant on the producer's supply elasticity:

Inelastic supply: prices rise significantly (firms can’t produce more easily).

Elastic supply: firms produce more without raising prices much.

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Demand increases due to the reasonings provide for graph 1. As demand increases, supply increases. However, in order to increase supply you need to increase output, thus increasing the demand in the labor market.

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This project explores how influencer marketing impacts consumer behavior in the U.S. economy.

Focused on both traditional economic models (supply and demand) and behavioral economics (e.g., FOMO, authority bias).

We connect this phenomenon to real-world policy implications, stakeholder impacts, and market outcomes.

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Influencer marketing is a powerful modern alternative to traditional advertising.

Platforms like TikTok, Instagram, YouTube make brand partnerships with influencers accessible and highly visible.

Different demographics are becoming increasingly influenced by this type of marketing.

The shift is transforming the entire marketing industry, changing how companies approach advertising and consumer engagement.

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Regular supply and demand doesn’t fully explain how influencer marketing works.

People don’t always make rational choices. Emotions and trust in influencers often drive purchases.

Fear of missing out makes people want what others have, even if they don’t need it.

Sometimes it’s not clear that a post is an ad, which can mess with someones decision making.

When something goes viral, everyone wants in which makes popularity, and that creates even more demand.

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To make influencer marketing fairer and more effective, here are a few policy changes we could consider:

Clearer Disclosure Rules: Make influencers clearly label sponsored content so consumers know when they're being marketed to.

Media Literacy Education: Help consumers understand marketing tactics by teaching them how to spot ads and make smarter buying decisions.

Support for Small Businesses: Offer grants or incentives to help small businesses compete in the influencer marketing space, making it easier for them to get noticed.

These changes would make influencer marketing more transparent and better align with what’s best for consumers.

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Influencer marketing is effective and drives changes in sales and market equilibrium

Influencers, large brands, and social media platforms tend to be winners

Small businesses as well as vulnerable and easily misled consumers tend to be losers

Efficient in reaching target audiences and boosting sales

Equity concerns exist due to information asymmetry

Overall, to improve fairness, policies need to focus on transparency, support for small players, and media literacy

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Traditional marketing relied on ads through TV, radio, or print, which often reached broad but less targeted audiences.

Now influencer marketing shifts demand more directly by targeting niche online communities with trusted voices.

In the past, consumer choices were more rational and based on needs or product features. Now, emotions and social influence can drive purchases.

Crumbl Cookies’ collab with the Jonas Brothers created an increase in demand. People bought just to be part of the trend not necessarily because they needed cookies.

Doritos strategy with everyday content creators shows how relatable influencers keep a brand relevant and maintain steady consumer interest.

These modern examples show that demand can be artificially boosted through hype, trust, and relatability. This is something older marketing strategies couldn’t do as effectively.

Economically, influencer marketing causes the demand curve to shift right, increasing both price and quantity sold.