Ray, Abhishek and Ghasemkhani, Hossein and Kannan, Karthik Natarajan, Ad-Blockers: Extortionists or Digital Age Robin Hoods? (June 23, 2017). Available at SSRN: https://ssrn.com/abstract=2991805

“As an answer to mitigating the impact of intrusive online advertising on users, ad-blockers have risen in prominence over the past few years. Initially dismissed by the online advertising industry as inconsequential, ad-blockers have evolved from a mere plugin tool on browsers to full-fledged platforms that derive benefit from certifying quality of advertisers and reducing disutility of the users. However, the rise of ad-blocking has prompted discussions on the validity of its price structure and its impact on quality of advertising online. Many term the business model of ad-blockers as an extortion based businesses, built on fleecing advertisers. Still others question whether ad-blocking will actually benefit online advertising quality. In this paper, we investigate these issues using a game-theoretic model consisting of three agents – advertisers, users and an ad-blocker. Through our model, we provide answers to questions related to price structure of ad-blocker platforms, platform membership trends and implications on advertising quality online.”