Customer Privacy and Competition

24 Pages Posted: 20 Jul 2016

See all articles by Oz Shy

Oz Shy

Federal Reserve Banks - Federal Reserve Bank of Atlanta

Rune Stenbacka

Hanken School of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: Fall 2016

Abstract

We analyze how different degrees of privacy protection affect industry profits, consumer welfare, and total welfare in a model with switching costs. Firms earn higher profits under weak privacy protection compared with strong or no privacy protection. The relationship between the degree of privacy protection and equilibrium profits is not monotonic. Consumer surplus and total welfare increase with the degree of privacy protection unless firms recognize consumerā€specific switching costs. In that case, pricing conditional on switching costs has favorable implications for consumer surplus and total welfare.

Suggested Citation

Shy, Oz and Stenbacka, Rune, Customer Privacy and Competition (Fall 2016). Journal of Economics & Management Strategy, Vol. 25, Issue 3, pp. 539-562, 2016. Available at SSRN: https://ssrn.com/abstract=2811928 or http://dx.doi.org/10.1111/jems.12157

Oz Shy (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Atlanta ( email )

1000 Peachtree Street N.E.
Atlanta, GA 30309-4470
United States

HOME PAGE: http://https://www.frbatlanta.org/research/economists/shy-oz.aspx

Rune Stenbacka

Hanken School of Economics ( email )

P.O. Box 479
FI-00101 Helsinki, 00101
Finland
+35 89 4313 3433 (Phone)
+35 89 4313 3382 (Fax)

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