Taxation and Privacy Protection on Internet Platforms *

Francis Bloch and Gabrielle Demange

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Abstract: This paper studies data collection by a monopolistic internet platform We show that the optimal strategy of the platform is either to cover the market or to choose the highest data exploitation level, excluding users with high privacy costs from the platform. For likely parameter values, the platform chooses an excessive level of data exploitation from the point of view of users. We study how different tax instruments can be used to reduce the level of data collection and analyze the effect of an opting-out option, letting users access the platform with no data collection. We show that a differentiated tax, taxing access revenues and data revenues at different rates is the most effective instrument and that the introduction of an opting-out option may harm users as it induces the platform to raise the level of data exploitation. JEL classification numbers: H23, L86, L50

Keywords: Digital services; Privacy protection; Taxation; Opt-out option (search for similar items in EconPapers)
Date: 2016-10-13
New Economics Papers: this item is included in nep-reg
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01381044v1
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Related works:
Journal Article: Taxation and privacy protection on Internet platforms (2018)
Working Paper: Taxation and privacy protection on Internet platforms (2018)
Working Paper: Taxation and privacy protection on Internet platforms (2018)
Working Paper: Taxation and Privacy Protection on Internet Platforms * (2016)
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