Re: Price Discrimination on Internet

[enilsson@xxxxxxxxx]

Jim D wrote about AdSubtract

>I used it for awhile. For some reason, the program
>didn't prevent the really annoying ads that I encountered
>when I went to BUSINESSWEEK on-line. . .

I just visited this site and Adsubtract blocked all the ads. I wonder if you
need to update the ad database and/or need to change the filter settings of
AdSubtract?

The problem with Adsubtract is that it has been very successful in dominating
the home-user market for this software. Websites can then spend their time
learning how to get around Adsubstract's ad blocking software/database. Then
Adsubtract needs to update its database to counter this activity. It is a
continual race.

Some really obnoxous ad technology has been developed in recent months in the
course of the battle to get consumers to look at ads onscreen.

One good development is that just the other day the FTC has ordered a company
that specialized in hijacking the browser of a viewer (and engaging in a
behavior known as mousetrapping) and spawning a multitude of windows--all
advertizing porn sites--without the control of the user who thought they were
going to a site for, say, Britney Spears. (Of course, perhaps this is some
ironic type of justice). See http://www.ftc.gov/opa/2002/05/cupcake.htm for
details of this really nasty behavor.

A different internet pricing issue: it has often been claimed that the
internet increases consumers' powers by making price comparison shopping
easier. This is made easier by sites that specialize in compiling price
information from dozens of web businesses. It is certainly possible that the
Internet might shifts, sometimes, some power to consumers.

But, on the other hand, some have argued that under plausible conditions the
ease of comparing prices on the internet can lead to more collusion between
firms--price cutting by one firm can be very quickly detected by another firm,
which can then match the price. This reduces the reward of price cutting and,
so, can make price cutting less likely to occur. Hal Varian has argued that
because web businesses constantly compare prices with rivals they can react to
price cutting faster than can consumers--thereby reducing the benefits of
price reductions across the industry.

This might--or might not--be true.

Eric