2001/09/24 by Michael R. Ward, Ward, Michael R., Yu-Ching Chen +1
Business, Management and Accounting · Computer Science · Economics, Econometrics and Finance · #Consumer Market Behavior and Pricing #Digital Platforms and Economics #Merger and Competition Analysis #cs.CY
paper · pdf · doi:10.48550/arxiv.cs/0109053
29th TPRC Conference, 2001
arxiv created 2001/09/24 · arxiv updated 2009/11/30
Consumers value keeping some information about them private from potential marketers. E-commerce dramatically increases the potential for marketers to accumulate otherwise private information about potential customers. Online marketers claim that this information enables them to better market their products. Policy makers are currently drafting rules to regulate the way in which these marketers can collect, store, and share this information. However, there is little evidence yet either of consumers' valuation of their privacy or of the benefits they might reap through better target marketing. We provide a framework for measuring a portion of the benefits from allowing marketers to make better use of consumer information. Target marketing is likely to reduce consumer search costs, improve consumer product selection decisions, and lower the marketing costs of goods sold. Our model allows us to estimate the value to consumers of only the latter, price reductions from more efficient marketing.