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Online advertising and privacy
Author(s) -
de Cornière Alexandre,
de Nijs Romain
Publication year - 2016
Publication title -
the rand journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.687
H-Index - 108
eISSN - 1756-2171
pISSN - 0741-6261
DOI - 10.1111/1756-2171.12118
Subject(s) - advertising , common value auction , business , product (mathematics) , online advertising , consumer privacy , forward auction , internet privacy , information privacy , microeconomics , computer science , auction theory , economics , the internet , geometry , mathematics , world wide web
An online platform auctions an advertising slot. Several advertisers compete in the auction, and consumers differ in their preferences. Prior to the auction, the platform decides whether to allow advertisers to access information about consumers (disclosure) or not (privacy). Disclosure improves the match between advertisers and consumers but increases product prices, even without price‐discrimination. We provide conditions under which disclosure or privacy is privately and/or socially optimal. When advertisers compete on the downstream market, disclosure can lead to an increase or a decrease in product prices depending on the nature of the information.