Data, Competition, and Consumer Privacy in Digital Markets
Clavora Braulin, Francesco <1991>
Subject
SECS-P/01 Economia politica
Description
In digital markets personal information is pervasively collected by firms.
In the first chapter I study data ownership and
product customization when there is exclusive access
to non rival but excludable data about consumer preferences. I show that an incumbent
firm does not have an incentive to sell an exclusively held dataset with a rival
firm, but instead it has an incentive to trade a customizing technology with the other
firm. In the second chapter I investigate the effects of consumer information on the
intensity of competition. In a two dimensional model of product
differentiation, firms use information on preferences to practice price
discrimination. I contrast a full privacy and a no privacy benchmark with a
regime in which firms are able to target consumers only partially. When data
is partially informative, firms are always better-off with price discrimination and an
exclusive access to user data is not necessarily a competition policy concern. From
a consumer protection perspective, the policy recommendation is that the regulator
should promote either no privacy or full privacy. In the third
chapter I introduce a data broker that observes either only one
or both dimensions of consumer information and sells this data to competing
firms for price discrimination purposes. When the seller exogenously holds
a partially informative dataset, an exclusive allocation arises. Instead, when the
dataset held is fully informative, the data broker trades information non exclusively
but each competitor acquires consumer data on a different dimension.
When data collection is made endogenous, non exclusivity is robust if
collection costs are not too high.
The competition policy suggestion is that exclusivity should
not be banned per se, but it is data differentiation in equilibrium that rises
market power in competitive markets. Upstream competition is sufficient to ensure
that both firms get access to consumer information.
Clavora Braulin, Francesco (2020) Data, Competition, and Consumer Privacy in Digital Markets, [Dissertation thesis], Alma Mater Studiorum Università di Bologna. Dottorato di ricerca in Economics , 32 Ciclo. DOI 10.48676/unibo/amsdottorato/9523.