Pricing strategies in electronic marketplaces with privacy-enhancing technologies

This article approaches the field of conflict between personalisation and privacy protection with micro-economic models. It discusses the compatability of pricing strategies with privacy-enhancing technologies as well as consequences for revenues and consumer prices. Privacy-enhancing technologies limit the possibility to implement price discrimination. A free-market solution with optional use of privacy-enhancing technology yields higher social welfare than mandatory use through government regulation. Privacy will likely remain a "luxury good".