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Privacy, Competition, and Multi-Homing

Jean-Marc Zogheib and Marc Bourreau

No 2021-15, EconomiX Working Papers from University of Paris Nanterre, EconomiX

Abstract: Two firms compete in prices and information disclosure levels. Firms derive revenues from two possible channels, i.e., by selling their service to consumers and by exploiting user data, sold to a monopoly data broker. A consumer signing up to one firm's service decides on the amount of personal information to provide. In a single-homing framework, firms engage in either a strict privacy regime with no information disclosure and high prices or a flexible privacy regime with positive disclosure levels and low prices, depending on consumer valuations. With the possibility of multi-homing, firms face issues in the monetization of multi-homing user data, which affects privacy regimes. On top of consumer valuations, the incentives to multi-home and product differentiation also impact firms' strategies. Firms may even end up engaging in a zero-privacy regime with maximal disclosure levels if monetization issues on multi-homing user data are not too significant.

Keywords: competition; online privacy; information disclosure; multi-homing. (search for similar items in EconPapers)
JEL-codes: D11 D40 L21 L41 (search for similar items in EconPapers)
Pages: 54 pages
Date: 2021
New Economics Papers: this item is included in nep-com and nep-mic
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