The Economics of Privacy

This chapter reviews economic analyses of privacy. We begin by scrutinizing the “free market” critique of privacy regulation. Welfare may be non-monotone in the quantity of information, hence there may be excessive incentive to collect information. This result applies to both non-productive and productive information. Over-investment is exacerbated to the extent that personal information is exploited across markets. Further, the “free market” critique does not apply to overt and covert collection of information that directly causes harm. We then review research on property rights and challenges in determining their optimal allocation. We conclude with insights from recent empirical research and directions for future research.

When the Bank Comes to You: Branch Network and Customer Multi-Channel Banking Behavior

Customers today increasingly interact with their banks using digital channels, lifting the necessity for banks to rethink the distribution of physical branches and customer behavior in a multi-channel environment. Using approximately 1.2M anonymized individual-level data from a large commercial bank in US over 6 years, our paper investigates the traditional channel – bank branches – and the impact of its network change (branch opening or closure) on customer multi-channel preferences and other banking behavior. Our results show that both branch opening and closure are associated with decreasing transactions through offline channels and increasing transactions in online banking. Hence, branch network change is likely to result in customer migrating from offline channels to online banking. In addition, we find that opening branch is associated with customers’ adoption of additional banking products in a short term. Interestingly, closing a branch does not lead to more account closures by customers

The Economics of Music Production. The Narrow Paths for Record Companies to Enter the Digital Era

On the basis of an in depth analysis of the flow of revenues within the music industry and of the emerging practices, we attempt to understand the logic at play in the current evolution of the structure of the industry. We claim that the record companies used to play a role that was useful for the dynamic and for the quality of music production, and analyze whether it can be maintained despite the impossibility for them to further control the formation and distribution of revenues generated by recorded music. Two antagonistic strategies, corresponding to different segments of the market, are highlighted in this paper. One targets the mass market and relies on the recognition by the on-line distributors of the mutual dependency between them and the record companies. It also admits that this music is characterized by short commercial life cycles and that it should be marketed as a consumer product. Moreover revenues are not necessarily generated by sales, but by the value of temporally exclusive release in some channels. The second model targets the wide number of niches at the fringe of this mass market and relies on the building of communities of customers sharing common tastes and values and on the development of their loyalty. The model is commercial, but relies clearly on the cooperation among the various stakeholders that build a common safe harbor enabling specific types of music to sustainably develop. Value added services funded by ubscription have to be developed.economics of culture, cultural industries, digital business model, P2P, industrial organization.

Business Buyers Are People Too: Do Personal Characteristics Help to Explain the Effectiveness of Selected Marketing Activities in a B2B Setting?

Due to its role relative to company performance, the topic of sales effectiveness has been richly explored for decades. Academic researchers in the fields of sales effectiveness, organizational purchasing, purchase types, and market segmentation have identified the importance of understanding the personal characteristics of decision makers in business-to- business (B2B) environments. Most of the historic literature focuses on demographic characteristics, which has been deemed insufficient for understanding individual’s motivations. While there has been recognition of the opportunity for psychographics and lifestyle data in B2B purchasing, there has been limited empirical research. Employing a contingency framework informed by Weitz and utilizing sales and marketing activities as well as results for 2,710 dyads, this study posits that the psychographic and lifestyle nature of B2B purchase decision makers, as well as the buyclass category of the purchase decision, moderate the relationship between specific sales activities and sales effectiveness. The results from this empirical study identify that there is strong support for the moderating effect of the purchasing decision maker’s psychographic and lifestyle composition on the relationship between sales activities and sales effectiveness and partial support for the moderating effect of buyclass category on the relationship between sales activities and sales effectiveness. In addition, the results identify that the sales activities of the internal sales function, not the external “customer-facing” sales function, have greater impact on sales effectiveness. Furthermore, the results indicate that proactive sales efforts yield increases in sales effectiveness across all subgroups evaluated