Consumer Privacy in Online Retail Supply Chains
48 Pages Posted: 31 Aug 2021 Last revised: 22 Jun 2022
Date Written: June 20, 2022
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: Suggested Citation