Consumer Privacy and Serial Monopoly
33 Pages Posted: 24 Apr 2019
Date Written: April 2019
We examine the implications of consumer privacy when preferences today depend upon past consumption choices, and consumers shop from different sellers in each period. Although consumers are ex ante identical, their initial consumption choices cannot be deterministic. Thus ex post heterogeneity in preferences arises endogenously. Consumer privacy improves social welfare, consumer surplus and the profits of the second-period seller, while reducing the profits of the first period seller, relative to the situation where consumption choices are observed by the later seller.
Keywords: consumer privacy, dynamic demand, endogenous screening, Nonlinear Pricing
JEL Classification: D11, D43, L13
Suggested Citation: Suggested Citation