Adware, Shareware, and Consumer Privacy

NET Institute Working Paper No. 04-02

37 Pages Posted: 15 Nov 2004

See all articles by Nataly Gantman

Nataly Gantman

Tel Aviv University - Eitan Berglas School of Economics

Yossi Spiegel

Tel Aviv University, Coller School of Management; Centre for Economic Policy Research (CEPR); ZEW – Leibniz Centre for European Economic Research

Date Written: October 2004

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, firms that advertise their products through ad banners, and consumers who buy software and consumer products. Adware allows advertisers to send targeted information to specific consumers and may therefore improve their purchasing decisions. At the same time, adware also raises privacy concerns. We study the effect of programmers' choice between shareware and adware on consumers' welfare through its effect on the beneficial 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.

Keywords: Adware, shareware, advertising, privacy, ad banners

Suggested Citation

Gantman, Nataly and Spiegel, Yossi, Adware, Shareware, and Consumer Privacy (October 2004). NET Institute Working Paper No. 04-02. Available at SSRN: https://ssrn.com/abstract=618741 or http://dx.doi.org/10.2139/ssrn.618741

Nataly Gantman (Contact Author)

Tel Aviv University - Eitan Berglas School of Economics ( email )

P.O. Box 39040
Ramat Aviv, Tel Aviv, 69978
Israel

Yossi Spiegel

Tel Aviv University, Coller School of Management ( email )

Ramat Aviv, Tel Aviv, 69978
Israel
972-3-640-9063 (Phone)
972-3-640-7739 (Fax)

HOME PAGE: http://www.tau.ac.il/~spiegel

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

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