Research Summary
Research Summary
Marketing and Privacy Concerns
Description
When finer consumer information becomes available, competing firms sometimes target consumers too finely, disrupting scale economies prematurely. This leads to excessive product variety or to the wasteful exclusion of certain consumer types. This paper suggests that privacy concerns emerge in anticipation of these effects. This interpretation of the privacy issue yields a number of counter-intuitive but realistic implications regarding the identity and behavior of concerned consumers. Market intermediaries and consumer communities that aggregate diverse consumer types to coarsen market access provide the most adequate resolution of privacy concerns.