Who Benefits from Online Privacy?

28 Pages Posted: 6 Feb 2012

See all articles by Vincent Conitzer

Vincent Conitzer

Duke University

Curtis R. Taylor

Duke University - Department of Economics

Liad Wagman

Duke University

Date Written: August 15, 2009

Abstract

When a firm is able to recognize its previous customers, it may use information about their purchase histories to price discriminate. We analyze a model with a monopolist and a continuum of heterogeneous consumers, where consumers are able to maintain their anonymity and avoid being identified as past customers, possibly at an (exogenous) cost. When consumers can costlessly maintain their anonymity, they all individually choose to do so, which paradoxically results in the highest profit for the firm. Increasing the cost of anonymity can benefit consumers, but only up to a point; at that point, the effect is reversed.

Keywords: Privacy, anonymity, price discrimination, electronic commerce

JEL Classification: L1, D8

Suggested Citation

Conitzer, Vincent and Taylor, Curtis R. and Wagman, Liad, Who Benefits from Online Privacy? (August 15, 2009). TPRC 2009. Available at SSRN: https://ssrn.com/abstract=1999805

Vincent Conitzer (Contact Author)

Duke University ( email )

100 Fuqua Drive
Durham, NC 27708-0204
United States

Curtis R. Taylor

Duke University - Department of Economics ( email )

213 Social Sciences Building
Box 90097
Durham, NC 27708-0204
United States
919-660-1827 (Phone)
919-684-8974 (Fax)

Liad Wagman

Duke University ( email )

100 Fuqua Drive
Durham, NC 27708-0204
United States

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