When E-Mail Becomes Junk Mail: The Welfare Implications of the Advancement of Communications Technology

Posted: 3 Jun 2004

See all articles by Daniel R. Shiman

Daniel R. Shiman

Federal Communications Commission (FCC)

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 welfare-maximizing 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.

Keywords: Direct Marketing, Externality, Information, Communications

JEL Classification: l96, M37, D62, L10

Suggested Citation

Shiman, Daniel R., When E-Mail Becomes Junk Mail: The Welfare Implications of the Advancement of Communications Technology. Available at SSRN: https://ssrn.com/abstract=553481

Daniel R. Shiman (Contact Author)

Federal Communications Commission (FCC) ( email )

445 12th Street SW
Washington, DC 20554
United States

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