July 05, 2006
Junior Scholars Workshop: Eric Goldman, A Coasean Analysis of Marketing
Posted by Christine Hurt

Good morning and welcome to the fourth paper presentation in the Second Annual Conglomerate Junior Scholars Workshop.  Todays' paper is A Coasean Analysis of Marketing by Eric Goldman.  The expert commentary, provided by Peter Huang and Frank Pasquale, will appear in separate posts under this one during the day.  We invite all readers to comment on Eric's paper in the commennts section of this post.  I have heard Eric present this paper, which espouses a contrarian view of "spam," at two conferences, and I look forward to the discussion here.

The Glom views this workshop as an academic conference in cyberspace.  Therefore, any anonymous comments will be deleted.  As with a conference environment, if you have comments you wish to share with Eric privately, feel free to email him with those comments.  The abstract of the paper is here:

Consumers claim to hate marketing—mostly, because they get too much unwanted marketing. In response, regulators develop medium-by-medium marketing suppression regulations. Unfortunately, these ad hoc solutions do little to satisfy consumers, and dynamic technologies and business practices quickly render them moot. Instead of continuing this cycle, there would be some benefit to developing a cross-media marketing regulatory scheme. However, any holistic solution must be predicated on a clear rationale for regulating marketing. The most common justification is that marketing imposes a negative externality on consumers, but this argument ignores the private and social welfare created by marketing and can lead to cost overinternalization and marketing undersupply. The Coase Theorem also suggests that social welfare improves by reducing the costs of matching marketers with interested consumers. To achieve this, consumers need a low cost but accurate mechanism to manifest their preferences. This Article shows that typical regulatory and marketplace solutions do not provide effective mechanisms. Instead, marketer-consumer matchmaking will improve from technology that will automatically infer consumer preferences and use these inferences to filter incoming marketing and seek out wanted content. This technology does not yet exist, but it is being rapidly developed. However, regulation of surreptitious monitoring devices (like adware and spyware) may inadvertently block the development of this socially-beneficial technology. As a result, current regulatory overreactions to developing technology may counterproductively foreclose social welfare improvements.

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» Can Spam and Spyware Ever Be Good? from Concurring Opinions ...
"Over at the Conglomerate, Professor Eric Goldman's paper, A Coasean Analysis of Marketing, is being ..." [more] (Tracked on July 5, 2006 @ 8:40)
» Can Spam and Spyware Ever Be Good? from Concurring Opinions ...
"Over at the Conglomerate, Professor Eric Goldman's paper, A Coasean Analysis of Marketing, is being ..." [more] (Tracked on March 3, 2007 @ 11:01)
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