Data Linkages and Privacy Regulation

Rossella Argenziano and Alessandro Bonatti

No 15203, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We assess the efficacy of privacy regulation when consumers are privacy conscious. We develop a model of data linkages where a consumer interacts sequentially with two firms: one firm collects data on consumer behavior, and the other firm leverages the data to set a quality level and a price. A data linkage benefits the consumer in equilibrium when the recipient firm is sufficiently similar to the collecting firm. We endogenize linkage formation under several existing privacy regulations. Voluntary consent requirements benefit consumers in equilibrium but blanket bans on discriminatory price and quality offers harm them.

Keywords: transparency; Ratchet effect (search for similar items in EconPapers)
JEL-codes: D44 D82 D83 (search for similar items in EconPapers)
Date: 2020-08
New Economics Papers: this item is included in nep-mic
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Citations: View citations in EconPapers (6)

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