Are E-Privacy and E-Commerce a Contradiction in Term ? - An Economic Examination

Dirk Frosch-Wilke
University of Applied Sciences, Kiel, Germany

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At first glance, electronic commerce seems to be inconsistent with electronic privacy. Personalization plays an important strategic role in e-commerce. Thus, a lot of information about online consumers are collected, analysed and used. By contrast, e-privacy is aimed at reducing the amount of collected information about the Internet users. On the other hand recent empirical studies show that lack of confidence in privacy protection of e-commerce environments results in lower sales in the business-to-consumer segment. The key contributions of this paper are to elaborate on general relations between e-commerce and e-privacy from an microeconomic perspective, to identify economic consequences entailed by lack of privacy protection, and to identify economic reasons for increasing personalization in e-commerce.