Privacy and Platform Competition

Posted: 12 Nov 2019

Date Written: November 1, 2018


We analyze platform competition where user data is collected to improve ad-targeting. Considering that users incur privacy costs, we show that the equilibrium level of data provision is distorted and can be inefficiently high or low: if overall competition is weak or if targeting benefits are low, too much private data is collected, and vice-versa. Further, we find that softer competition on either market side leads to more data collection, which implies substitutability between competition policy measures on both market sides. Moreover, if platforms engage in two-sided pricing, data provision is efficient.

Keywords: Platform competition, User data, Ad targeting

JEL Classification: D43, L13, L40, L86

Suggested Citation

Dimakopoulos, Philipp D. and Sudaric, Slobodan, Privacy and Platform Competition (November 1, 2018). International Journal of Industrial Organization, Vol. 61, 2018, Available at SSRN:

Philipp D. Dimakopoulos

Humboldt University of Berlin ( email )

Unter den Linden 6
Berlin, AK Berlin 10099

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