A Coasean Analysis of Marketing

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Citation: Eric Goldman (2006) A Coasean Analysis of Marketing. Wisconsin Law Review (RSS)

Download: http://ssrn.com/abstract=912524

Tagged: Economics (RSS) advertising (RSS), law and economics (RSS), marketing (RSS)


Author reviews private consumer welfare components of marketing (substantive, nonsubstantive reactions, attention; each of which may be positive or negative; producer welfare is assumed to be positive) says most only consider one of these, assume market failure. Regulations also create problems. Reviews allocation of entitlements from Coasean perspective in cases of opt-in, opt-out, and mandatory metadata (eg "advertising"); each has problems.

Surveys market alternatives to state regulation: attention markets (pay consumer to receive marketing), infomediaries (essentially facilitating attention markets), bonded sender (consumer gets small payment from marketer-provided escrow if marketing unwanted); none of these have taken off.

Both regulatory and market are "generally are inhibited by the accuracy- simplicity tradeoff and the costs incurred by the consumer in manifesting their preferences."

Proposes "Coasean Filters" which would learn everything about a consumer through monitoring, which would solve the problem of consumer manifesting preferences. Argues could enhance privacy if consumer data stored locally, encrypted, and enhance communinications generally.