When e-mail becomes junk mail: The welfare implications of the advancement of communications technology |
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Authors: | Daniel R. Shiman |
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Affiliation: | 1. Department of Economics, SUNY-Oswego, State University of New York-Oswego, 13126, Oswego, NY, U.S.A.
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Abstract: | This paper examines the negative externality imposed by a direct marketing firm on the consumers who must spend time reading and processing the advertising they receive from that firm. A model is developed to show that with low communication costs, a firm would send out more unsolicited advertising messages than would be desired by consumers and a social welfaremaximizing planner. The optimal Pigovian tax to eliminate the problem of excessive message sending is then derived. The extent of the problem in a number of media, including direct mail, telemarketing, and the Internet, is briefly examined. |
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