The value of personal information in online markets with endogenous privacy

Rodrigo Montes, Wilfried Sand-Zantman and Tommaso Valletti
Additional contact information
Rodrigo Montes: TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement

Post-Print from HAL

Abstract: This paper investigates the effects of price discrimination on prices, profits and consumer surplus, when one or more competing firms can use consumers' private information to price discriminate and consumers can pay a privacy cost to avoid it. While a monopolist always benefits from higher privacy costs, this is not true in the competing duopoly case. In this last case, firms' individual profits are decreasing while consumer surplus is increasing in the privacy cost. Finally, under competition, we show that the optimal selling strategy for the owner of consumer data consists in dealing exclusively with one firm in order to create maximal competition between the winner and the loser of data. This brings ineficiencies, and we show that policy makers should concentrate their attention on exclusivity deals rather than making it easier for consumers to protect their privacy.

Keywords: Privacy; Information; Price Discrimination (search for similar items in EconPapers)
Date: 2019
Note: View the original document on HAL open archive server: https://hal.science/hal-03270184v1
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (59)

Published in Management Science, 2019, 65 (3), pp.1342-1362. ⟨10.1287/mnsc.2017.2989⟩

Downloads: (external link)
https://hal.science/hal-03270184v1/document (application/pdf)

Related works:
Journal Article: The Value of Personal Information in Online Markets with Endogenous Privacy (2019)
Working Paper: The value of personal information in online markets with endogenous privacy (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03270184

DOI: 10.1287/mnsc.2017.2989

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().