Data-Driven Envelopment with Privacy-Policy Tying

21 Pages Posted: 9 Jun 2020 Last revised: 12 May 2021

See all articles by Daniele Condorelli

Daniele Condorelli

University of Warwick - Department of Economics

Jorge Padilla

Compass Lexecon

Date Written: May 12, 2020

Abstract

We present a theory of monopoly protection by means of entry in adjacent markets that
have a common customer base (i.e., envelopment). A firm dominant in its market enters a data rich
secondary market and engages in predatory pricing and privacy-policy tying. We define
the latter as conditioning service provision to the subscription of a privacy-policy that allows
bundling of user data across all sources. Acquiring data from the secondary market confers
an advantage in the primary market that shields the dominant firm from entry, thus harming
consumers. We discuss potential remedies, including data unbundling, sharing and portability.

Keywords: Entry-Deterrence, Predatory Pricing, Platform Envelopment, User Data, Privacy-Policy Tying

JEL Classification: L12, L41

Suggested Citation

Condorelli, Daniele and Padilla, Jorge, Data-Driven Envelopment with Privacy-Policy Tying (May 12, 2020). Available at SSRN: https://ssrn.com/abstract=3600725 or http://dx.doi.org/10.2139/ssrn.3600725

Daniele Condorelli (Contact Author)

University of Warwick - Department of Economics ( email )

Coventry CV4 7AL
United Kingdom

Jorge Padilla

Compass Lexecon ( email )

Paseo de la Castellana 7
Madrid, 28046
Spain

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