Market Reactions to Consumer Concerns
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Although the Internet is still very young — commercial use of the medium did not begin to develop until the mid-1990s — market forces are moving rapidly to provide the privacy desired by consumers, in part by eliminating problems of asymmetric information. Perhaps most importantly, firms that do business on the Internet are discovering that there are substantial “reputation” costs associated with adopting information practices that are inconsistent with consumers’ expectations. Firms respond by modifying their practices and by avoiding practices that may not be greeted favorably by their customers.
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