Robust Regulation of Firms' Access to Consumer Data

Jose Higueras

Papers from arXiv.org

Abstract: In this paper I study how to regulate firms' access to consumer data when the latter is used for price discrimination and the regulator faces non-Bayesian uncertainty about the correlation structure between data and willingness to pay, and hence about the way the monopolist will use the consumers' information to segment the market. I fully characterize all policies that are worst-case optimal when the regulator maximizes consumer surplus: the regulator allows the monopolist to access data if the monopolist cannot use the database to identify a small group of consumers. Furthermore, from the set of policies that achieve the largest worst-case consumer surplus, I identify the ones that are undominated; i.e., there is no alternative policy that never yields lower consumer surplus, and sometimes strictly higher consumer surplus.

Date: 2023-05, Revised 2024-03
New Economics Papers: this item is included in nep-com, nep-dcm, nep-mfd, nep-mic and nep-reg
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