Privacy and Platform Competition

Philipp Dimakopoulos and Slobodan Sudaric
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Philipp Dimakopoulos: Humboldt University Berlin
Slobodan Sudaric: Humboldt University Berlin

No 67, Rationality and Competition Discussion Paper Series from CRC TRR 190 Rationality and Competition

Abstract: We analyze platform competition where user data is collected to improve adtargeting. Considering that users incur privacy costs, we show that the equilibrium level of data provision is distorted and can be inefficiently high or low: if overall competition is weak or if targeting benefits are low, too much private data is collected, and vice-versa. Further, we find that softer competition on either market side leads to more data collection, which implies substitutability between competition policy measures on both market sides. Moreover, if platforms engage in two-sided pricing, data provision is efficient.

Keywords: ad targeting; platform competition; privacy; user data (search for similar items in EconPapers)
JEL-codes: D43 L13 L40 L86 (search for similar items in EconPapers)
Date: 2018-01-22
New Economics Papers: this item is included in nep-com, nep-mic and nep-pay
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:rco:dpaper:67

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