IDEAS home Printed from https://ideas.repec.org/p/net/wpaper/0402.html
   My bibliography  Save this paper

Adware, Shareware, and Consumer Privacy

Author

Listed:
  • Nataly Gantman

    (Tel Aviv University)

  • Yossi Spiegel

    (Tel Aviv University)

Abstract

Programmers can distribute new software to online users either for a fee as shareware or bundle it with advertising banners and distribute it for free as adware. In this paper we study the programmers’ choice between these two modes of distribution in the context of a model that take explicit account of the strategic interaction between programmers who develop software, …rms that advertise their products through ad banners, and consumers who buy software and consumer products. Adware allows advertisers to send targeted information to speci…c consumers and may therefore improve their purchasing decisions. At the same time, adware also raises privacy concerns. We study the e¤ect of programmers’ choice between shareware and adware on consumers’ welfare through its e¤ect on the bene… cial information that consumers receive about consumers products on the one hand and their loss of privacy on the other hand. We also examine the implications of improvements in the technology of ad banners and the desirability of bans on the use of adware.

Suggested Citation

  • Nataly Gantman & Yossi Spiegel, 2004. "Adware, Shareware, and Consumer Privacy," Working Papers 04-02, NET Institute, revised Oct 2004.
    • Handle: RePEc:net:wpaper:0402
    as

    Download full text from publisher

    File URL: http://www.netinst.org/Gantman_Spiegel.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Calzolari, Giacomo & Pavan, Alessandro, 2006. "On the optimality of privacy in sequential contracting," Journal of Economic Theory, Elsevier, vol. 130(1), pages 168-204, September.
    2. Posner, Richard A, 1981. "The Economics of Privacy," American Economic Review, American Economic Association, vol. 71(2), pages 405-409, May.
      • Posner, Richard A., 1980. "The Economics of Privacy," Working Papers 16, The University of Chicago Booth School of Business, George J. Stigler Center for the Study of the Economy and the State.
    3. Alessandro Acquisti & Hal R. Varian, 2005. "Conditioning Prices on Purchase History," Marketing Science, INFORMS, vol. 24(3), pages 367-381, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Il-Horn Hann & Kai-Lung Hui & Sang-Yong T. Lee & Ivan P. L. Png, 2008. "Consumer Privacy and Marketing Avoidance: A Static Model," Management Science, INFORMS, vol. 54(6), pages 1094-1103, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dengler, Sebastian & Prüfer, Jens, 2021. "Consumers' privacy choices in the era of big data," Games and Economic Behavior, Elsevier, vol. 130(C), pages 499-520.
    2. Bouckaert, J.M.C. & Degryse, H.A., 2006. "Opt In versus Opt Out : A Free-Entry Analysis of Privacy Policies," Other publications TiSEM 17393c5d-1ed2-47ec-bc96-9, Tilburg University, School of Economics and Management.
    3. Lagerlöf, Johan N.M., 2023. "Surfing incognito: Welfare effects of anonymous shopping," International Journal of Industrial Organization, Elsevier, vol. 87(C).
    4. Jin-Hyuk Kim & Liad Wagman, 2015. "Screening incentives and privacy protection in financial markets: a theoretical and empirical analysis," RAND Journal of Economics, RAND Corporation, vol. 46(1), pages 1-22, March.
    5. Skreta, Vasiliki, 2015. "Optimal auction design under non-commitment," Journal of Economic Theory, Elsevier, vol. 159(PB), pages 854-890.
    6. Blades, Nicholas & Herrera-González, Fernando, 2016. "An Economic Analysis of Personal Data Protection Obligations in the European Union," 27th European Regional ITS Conference, Cambridge (UK) 2016 148661, International Telecommunications Society (ITS).
    7. Morlok, Tina & Matt, Christian & Hess, Thomas, 2017. "Privatheitsforschung in den Wirtschaftswissenschaften: Entwicklung, Stand und Perspektiven," Working Papers 1/2017, University of Munich, Munich School of Management, Institute for Information Systems and New Media.
    8. Benjamin Hermalin & Michael Katz, 2006. "Privacy, property rights and efficiency: The economics of privacy as secrecy," Quantitative Marketing and Economics (QME), Springer, vol. 4(3), pages 209-239, September.
    9. Ramon Casadesus-Masanell & Andres Hervas-Drane, 2015. "Competing with Privacy," Management Science, INFORMS, vol. 61(1), pages 229-246, January.
    10. Alessandro Bonatti, 2023. "The Platform Dimension of Digital Privacy," NBER Chapters, in: The Economics of Privacy, National Bureau of Economic Research, Inc.
    11. Kai-Lung Hui & I.P.L. Png, 2005. "The Economics of Privacy," Industrial Organization 0505007, University Library of Munich, Germany, revised 29 Aug 2005.
    12. Spiegel, Yossi, 2013. "Commercial software, adware, and consumer privacy," International Journal of Industrial Organization, Elsevier, vol. 31(6), pages 702-713.
    13. Piccolo, Salvatore & Pagnozzi, Marco, 2013. "Information sharing between vertical hierarchies," Games and Economic Behavior, Elsevier, vol. 79(C), pages 201-222.
    14. Daron Acemoglu & Ali Makhdoumi & Azarakhsh Malekian & Asu Ozdaglar, 2022. "Too Much Data: Prices and Inefficiencies in Data Markets," American Economic Journal: Microeconomics, American Economic Association, vol. 14(4), pages 218-256, November.
    15. Byung‐Cheol Kim & Jay Pil Choi, 2010. "Customer Information Sharing: Strategic Incentives and New Implications," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 19(2), pages 403-433, June.
    16. Oliver Budzinski & Annika Stöhr, 2019. "Competition policy reform in Europe and Germany – institutional change in the light of digitization," European Competition Journal, Taylor & Francis Journals, vol. 15(1), pages 15-54, January.
    17. Catherine Tucker, 2023. "The Economics of Privacy: An Agenda," NBER Chapters, in: The Economics of Privacy, National Bureau of Economic Research, Inc.
    18. Avi Goldfarb, 2014. "What is Different About Online Advertising?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 44(2), pages 115-129, March.
    19. Jacek Wójcik, 2018. "Privacy as an Object of Exchange," Collegium of Economic Analysis Annals, Warsaw School of Economics, Collegium of Economic Analysis, issue 49, pages 125-136.
    20. Budzinski, Oliver, 2016. "Aktuelle Herausforderungen der Wettbewerbspolitik durch Marktplätze im Internet," Ilmenau Economics Discussion Papers 103, Ilmenau University of Technology, Institute of Economics.

    More about this item

    Keywords

    adware; shareware; advertising; privacy; ad banners;
    All these keywords.

    JEL classification:

    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:net:wpaper:0402. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Nicholas Economides (email available below). General contact details of provider: http://www.NETinst.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.