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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

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    File URL: http://www.netinst.org/Gantman_Spiegel.pdf
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    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)

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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.

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    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

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