tailieunhanh - Privacy, Economics, and Price Discrimination on the Internet [Extended Abstract]

The rapid erosion of privacy poses numerous puzzles. Why is it occurring, and why do people care about it? This paper proposes an explanation for many of these puzzles in terms of the increasing importance of price discrimination. Privacy appears to be declining largely in order to facilitate di®erential pricing, which o®ers greater social and economic gains than auctions or shopping agents. The thesis of this paper is that what really motivates commercial organizations (even though they often do not realize it clearly themselves) is the growing incentive to price discriminate, coupled with the increasing ability to price discriminate. It is the same incentive that has. | Privacy Economics and Price Discrimination on the Internet Extended Abstract Andrew Odlyzko Digital Technology Center University of Minnesota 499 Walter Library 117 Pleasant St. SE Minneapolis MN 55455 USA odlyzko@ http odlyzko Revised version July 27 2003 Abstract. The rapid erosion of privacy poses numerous puzzles. Why is it occurring and why do people care about it This paper proposes an explanation for many of these puzzles in terms of the increasing importance of price discrimination. Privacy appears to be declining largely in order to facilitate di erential pricing which o ers greater social and economic gains than auctions or shopping agents. The thesis of this paper is that what really motivates commercial organizations even though they often do not realize it clearly themselves is the growing incentive to price discriminate coupled with the increasing ability to price discriminate. It is the same incentive that has led to the airline yield management system with a complex and constantly changing array of prices. It is also the same incentive that led railroads to invent a variety of price and quality di erentiation schemes in the 19th century. Privacy intrusions serve to provide the information that allows sellers to determine buyers willingness to pay. They also allow monitoring of usage to ensure that arbitrage is not used to bypass discriminatory pricing. Economically price discrimination is usually regarded as desirable since it often increases the e ciency of the economy. That is why it is frequently promoted by governments either through explicit mandates or through indirect means. On the other hand price discrimination often arouses strong opposition from the public. There is no easy resolution to the con ict between sellers incentives to price discriminate and buyers resistance to such measures. The continuing tension between these two factors will have important consequences for the nature of the economy. It will also .