Economics of identity management:: A supply-side perspective

In an online world, the temptation to exploit customer information for marketing purposes is a strong argument for customers to use a privacy enhancing identity management system. However, the success of this technology depends on the support from the vendors as well. Apart from practical aspects, such as usability, trustworthiness, and standardisation, economic aspects play a key role in this decision. This paper examines the cost-utility trade-off from a supply-side perspective with micro-economic models. Albeit still limited to the case of a monopolist supplier, we reflect the impact of different customer preferences towards privacy, and the possibility to implement price discrimination.