Commercial software, adware, and consumer privacy

Yossi Spiegel

International Journal of Industrial Organization, 2013, vol. 31, issue 6, 702-713

Abstract: I study the choice between selling new software commercially and bundling it with ads and distributing it for free as adware. Adware allows advertisers to send targeted information to consumers which improves their purchasing decisions, but also entails a loss of privacy. I show that adware is more profitable when the perceived quality of the software is relatively low, when tracking technology improves, when consumers benefit more from information on consumer products and are less likely to receive it from external sources. I also show that improvements in the technology of display ads will lead to less violation of privacy and will benefit consumers, that depending on the software's quality, there are either too many or too few display ads in equilibrium, and that from a social perspective, adware dominates commercial software.

Keywords: Commercial software; Adware; Advertising; Display ads; Privacy (search for similar items in EconPapers)
JEL-codes: L12 L13 M37 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:31:y:2013:i:6:p:702-713

DOI: 10.1016/j.ijindorg.2013.03.001

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