Monday, July 28, 2008

Spam may be described as an "externality" problem

An externality occurs when a decision causes costs or benefits to third party stakeholders, often, although not necessarily, from the use of a public good. In other words, the participants in an economic transaction do not necessarily bear all of the costs or reap all of the benefits of the transaction. For example, manufacturing that causes air pollution imposes costs on others when making use of public air. In a competitive market, this means too much or too little of the good may be produced and consumed in terms of overall cost or benefit to society, depending on incentives at the margin and strategic behavior. In the absence of significant externalities, parties to an economic transaction are assumed to benefit, improving the overall welfare of society. If third parties benefit substantially, such as in areas of education or safety, the good may be under-provided (or under-consumed); if costs to the public exceed costs to the economic decision makers, such as in pollution, the good may be over-provided, in terms of overall benefit or cost to society. e mail and instant messaging (IM) systems represent two communication technologies that are potentially substitutable. A unique feature of e-mail and IM is that their value to an individual user increases as the number of other people adopting the system grows. This is referred to as a positive network externality. This externality makes it difficult for consumers to switch to other systems because of the potential loss of connectivity with network members. Further, as this externality grows, it has unintended negative consequences in the form of spam. Including these three network externality effects positive, cross-impact, and negative. The determinants of electronic communication system use based on an extended Technology Acceptance Model. User perceptions regarding network externalities have a positive impact on use of electronic communication systems while perceptions of problems associated with unsolicited messages and perceived usefulness of alternative systems do not significantly affect system use.

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