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An Economic Response to Unsolicited Communication

Author

Listed:
  • Loder Theodore

    () (University of Michigan)

  • Van Alstyne Marshall

    () (Boston University & MIT)

  • Wash Rick

    () (University of Michigan)

Abstract

If communication involves some transactions cost to both sender and recipient, what policy ensures that correct messages -- those with positive social surplus - get sent? Filters block messages that harm recipients but benefit senders by more than transactions costs. Taxes can block positive value messages, and allow harmful messages through. In contrast, we propose an ``Attention Bond,'' allowing recipients to define a price that senders must risk to deliver the initial message.The underlying problem is first-contact information asymmetry with negative externalities. Uninformed senders waste recipient attention through message pollution. Requiring attention bonds creates an attention market, effectively applying the Coase Theorem to price this scarce resource. In this market, screening mechanisms shift the burden of message classification from recipients to senders, who know message content. Price signals can also facilitate decentralized two-sided matching. In certain limited cases, this leads to greater welfare than use of even ``perfect'' filters.

Suggested Citation

  • Loder Theodore & Van Alstyne Marshall & Wash Rick, 2006. "An Economic Response to Unsolicited Communication," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 6(1), pages 1-38, March.
  • Handle: RePEc:bpj:bejeap:v:advances.6:y:2006:i:1:n:2
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    Citations

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    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.
    2. Justin M. Rao & David H. Reiley, 2012. "The Economics of Spam," Journal of Economic Perspectives, American Economic Association, vol. 26(3), pages 87-110, Summer.
    3. Chiao, Benjamin & MacKie-Mason, Jeffrey, 2012. "Using uncensored communication channels to divert spam traffic," Information Economics and Policy, Elsevier, vol. 24(3), pages 173-186.
    4. repec:clg:wpaper:2008-09 is not listed on IDEAS
    5. Pavlov, Oleg V. & Melville, Nigel & Plice, Robert K., 2008. "Toward a sustainable email marketing infrastructure," Journal of Business Research, Elsevier, vol. 61(11), pages 1191-1199, November.
    6. Curtis B. Eaton & Ian A. MacDonald & Laura Meriluoto, 2008. "Spam - solutions and their problems," Working Papers in Economics 08/21, University of Canterbury, Department of Economics and Finance.

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