A concern central to the economics of privacy is that firms may use consumer data to price discriminate. A common  response is that consumers should have control over their data and the ability to choose howfirms access it . Since firms draw inferences based on both the data seen as well as the consumer's disclosure choices, the strategic implications of this proposal are unclear. We investigate whether such measures improve consumer welfare in monopolistic and competitive environments . We find that consumer control can guarantee gains for every consumer type relative to both perfect price discrimination and no personalized pricing. This result is driven by two ideas. First, consumers can use disclosure to amplify competition between firms . Second, consumers can share information that induces a seller---even a monopolist---to make price concessions. Furthermore, whether consumer control improves consumer surplus depends on both the technology of disclosure and the competitivenessof the marketplace. In a competitive market, simple disclosure technologies such as "track / do-not-track" suffice for guaranteeing gains in consumer welfare. However, in a monopolistic market, welfare gains require richer forms of disclosure technology whereby consumers can decide how much information they would like to convey .
Central to privacy concerns is that firms may use consumer data to price discriminate. A common policy response is that consumers should be given control over which firms access their data and how . Since firms learn about a consumer's preferences based on the data seen and the consumer's disclosure choices, the equilibrium implications of consumer control are unclear. We study whether such measures improve consumer welfare in monopolistic and competitive markets . We find that consumer control can improve consumer welfare relative to both perfect price discrimination and no personalized pricing. First, consumers can use disclosure to amplify competitive forces . Second, consumers can disclose information to induce even a monopolist to lower prices. Whether consumer control improves welfare depends on the disclosure technology and market competitiveness. Simple disclosure technologies suffice in competitive markets. When facing a monopolist, a consumer needs partial disclosure possibilities to obtain any welfare gains .
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A concern central to the economics of privacy
Central to privacy concerns
A
policy
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have control over
be given control over which firms access
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the ability to choose howfirms access it
how
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draw inferences based on both
learn about a consumer's preferences based on
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as well as
and
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strategic implications of this proposal
equilibrium implications of consumer control
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investigate
study
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environments
markets
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guarantee gains for every consumer type
improve consumer welfare
D
This result is driven by two ideas.
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competition between firms
competitive forces
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share information that induces a seller---even a monopolist---to make price concessions. Furthermore, whether
disclose information to induce even a monopolist to lower prices. Whether
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consumer surplus depends on both the technology of disclosure and the competitivenessof the marketplace. In a competitive market, simple disclosure technologies such as "track / do-not-track" suffice for guaranteeing gains in consumer welfare. However, in a monopolistic market, welfare gains require richer forms of disclosure technology whereby consumers can decide how much information they would like to convey
welfare depends on the disclosure technology and market competitiveness. Simple disclosure technologies suffice in competitive markets. When facing a monopolist, a consumer needs partial disclosure possibilities to obtain any welfare gains