Consumer Privacy in Online Retail Supply Chains

48 Pages Posted: 31 Aug 2021 Last revised: 22 Jun 2022

See all articles by Xiaoyu Wang

Xiaoyu Wang

Washington University in St. Louis - John M. Olin Business School

Fasheng Xu

Syracuse University - Whitman School of Management

Fuqiang Zhang

Washington University in St. Louis - John M. Olin Business School

Date Written: June 20, 2022

Abstract

Exploitation of consumer data allows online retailers to enhance services provided to consumers, but at the risk of causing unintended privacy issues. There has been debate about whether to devise regulation policies to restrict data collection and usage by online retailers. This paper studies the implications of newly adopted privacy policies such as the GDPR (General Data Protection Regulation) for online retail supply chains consisting of a retailer and a supplier. We find that, although the GDPR is designed to protect consumer privacy, it may actually hurt consumer surplus while benefiting the retailer. In fact, the GDPR may even lead to a triple-lose situation for the retailer, supplier, and consumers. We further explore two coordinated supply chain arrangements, i.e., agency selling and vertical integration. We show that the GDPR always enhances the social welfare under these two arrangements, but it may still decrease the consumer surplus. Our results have significant implications for consumers, supply chain firms, and policymakers, and contribute to the literature evaluating the impact of privacy regulation on technology innovation and adoption.

Keywords: GDPR, consumer privacy, personal data, data regulation, online retailing, supply chains

Suggested Citation

Wang, Xiaoyu and Xu, Fasheng and Zhang, Fuqiang, Consumer Privacy in Online Retail Supply Chains (June 20, 2022). Available at SSRN: https://ssrn.com/abstract=3912642 or http://dx.doi.org/10.2139/ssrn.3912642

Xiaoyu Wang

Washington University in St. Louis - John M. Olin Business School ( email )

One Brookings Drive
Campus Box 1133
St. Louis, MO 63130-4899
United States

Fasheng Xu (Contact Author)

Syracuse University - Whitman School of Management ( email )

721 University Avenue
Syracuse, NY 13244-2130
United States

HOME PAGE: http://www.fashengxu.com

Fuqiang Zhang

Washington University in St. Louis - John M. Olin Business School ( email )

One Brookings Drive
Campus Box 1133
St. Louis, MO 63130-4899
United States

HOME PAGE: http://www.olin.wustl.edu/faculty/zhang/

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