Privacy, exposure and price discrimination

This paper analyzes the problem faced by an intermediary who owns a finer market access system (i.e., the capability to separately access two types of consumers who previously remained undistinguishable). The intermediary could decide to makethe system available to one firm, or to several firms, or to no firm at all. The intermediary's actions are paid for and commanded by the best-bidding agent, from among firms, minority-type consumers, and majority-type consumers. Three possible solutions emerge: (1) "privacy" or market coarsening-when majority-type consumers pay the intermediary to prevent access. (2)"exposure" or reverse marketing-when minority-type consumers pay the intermediary to promote their type widely, at no charge for the firms, and (3) "price discrimination" when one firm acquires the access system in exclusivity to gain a competitive advantage. The first two solutions imply a degree of consumer empowerment that existing models of marketing (in which the market for consumer access systems is missing) have overlooked.