A Brief Primer on the Economics of Targeted Advertising

Authors:
Yan Lau

This paper provides an economic approach to thinking about targeted online advertising, specifically with regard to the collection and use of personal data to enable targeting. Restricting the collection of personal data necessarily limits the use of targeted ads by firms to reach potential customers. This paper considers the effects of moving away from data collection and targeted ads, with particular focus towards the effects on consumers, and discusses the theoretical and empirical research conducted to address this issue.