Online Advertising and Privacy

32 Pages Posted: 19 Dec 2012 Last revised: 23 May 2014

Alexandre de Corniere

University of Oxford

Romain de Nijs

Paris School of Economics (PSE)

Date Written: May 23, 2014

Abstract

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.

Keywords: online advertising, privacy, information disclosure, auctions

JEL Classification: D4

Suggested Citation

de Corniere, Alexandre and Nijs, Romain de, Online Advertising and Privacy (May 23, 2014). Available at SSRN: https://ssrn.com/abstract=2191124 or http://dx.doi.org/10.2139/ssrn.2191124

Alexandre De Corniere (Contact Author)

University of Oxford ( email )

Department of Economics
Manor Road
Oxford, OX1 3UQ
United Kingdom

Romain De Nijs

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

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