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Cited by 280Consumer Market Behavior and PricingPrivacy, Security, and Data ProtectionDigital Platforms and Economics

The Value of Personal Information in Online Markets with Endogenous Privacy

Open access
Montes, Rodrigo, Sand-Zantman, Wilfried, Valletti, Tommaso·2019·Management Science
DOI 10.1287/mnsc.2017.2989
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Abstract

We investigate the effects of price discrimination on prices, profits, and consumer surplus when (a) at least one competing firm can use consumers’ private information to price discriminate yet (b) consumers can prevent such use by paying a “privacy cost.” Unlike a monopolist, competing duopolists do not always benefit from a higher privacy cost because each firm’s profit decreases—and consumer surplus increases—with that cost. Under such competition, the optimal strategy for an owner of consumer data that sells information in a single block is selling to only one firm, thereby maximizing the stakes for rival buyers. The resulting inefficiencies imply that policy makers should devote more attention to discouraging exclusivity deals and less to ensuring that consumers can easily protect their privacy. The online appendix is available at https://doi.org/10.1287/mnsc.2017.2989 . This paper was accepted by J. Miguel Villas-Boas, marketing.

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  • The price discrimination literature tends to view pricing as a process of marketers setting the price and consumers reacting to the price.

    “The price discrimination literature (e.g., Montes et al. 2019) tends to view pricing as a process of marketers setting the price and consumers reacting to the price.”

    From A strategic framework for artificial intelligence in marketing (2021) · cites this paper as Montes et al. 2019

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Research works printed but not linked: 7

  1. Chen, Y. and G. Iyer (2002). 'Consumer addressability and customized pricing', Marketing Science , Vol. 22(2), 197-208.
  2. Hirshleifer, J. (1971). 'The Private and Social Value of Information and the Reward to Inventive Activity', American Economic Review , Vol. 61(4), 561-574.
  3. Li, L., R. McKelvey and T. Page (1987). 'Optimal Research for Cournot Oligopolists', Journal of Economic Theory , Vol. 42(1), 140-166.
  4. Mikians, J., L. Gyarmati, V. Erramilli, and N. Laoutaris (2013). 'Crowd-assisted search for price discrimination in e-commerce: First results'. In Proceedings of the 9 th ACM Conference on Emerging Networking Experiments and Technologies , 1-6.
  5. Posner, R. (1981). 'The Economics of Privacy', American Economic Review , Vol. 71(2), 405-409.
  6. Shelanski, H. (2013). 'Information, Innovation, and Competition Policy for the Internet', University of Pennsylvania Law Review , Vol. 161, 1663-1705.
  7. Thisse J. and X. Vives (1988). 'On The Strategic Choice of Spatial Price Policy', American Economic Review , Vol. 78(1), 122-137.

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Authors
Montes, R., Sand-Zantman, W., & Valletti, T.
Affiliations
  • Compass Lexecon, Washington, DC 20004
  • Toulouse School of Economics, 31015 Toulouse Cedex 6, France
  • University of Rome Tor Vergata (IT)
ORCID
Venue
Management Science
Publisher
Institute for Operations Research and the Management Sciences (INFORMS)
Published
2019-03
Volume
65
Issue
3
Pages
1342-1362
ISSN
  • 0025-1909 (ISSN-L)
  • 1526-5501
DOI
10.1287/mnsc.2017.2989
OpenAlex
W3123966880
Cited by
280
References
43
Citations by year
2026: 29 · 2025: 51 · 2024: 36 · 2023: 41 · 2022: 43 · 2021: 22 · 2020: 23 · 2019: 19 · 2018: 9 · 2017: 4 · 2016: 1 · 2015: 1 · 2013: 1
FWCI
32.65
Type
journal article
Language
en
Open access
Licence
other-oa
Locations
  • Management Science (publishedVersion)
  • Toulouse 1 Capitole Publications (Université Toulouse I Capitole) (acceptedVersion)
  • RePEc: Research Papers in Economics (submittedVersion)
  • HAL (submittedVersion, other-oa)
  • Cineca Institutional Research Information System (Tor Vergata University) (submittedVersion)
  • Spiral (Imperial College London) (submittedVersion)
Funders
Agence Nationale de la Recherche (ANR-12-BSH1-0009)
Topics
  • Social Sciences › Business, Management and Accounting › Marketing › Consumer Market Behavior and Pricing
  • Social Sciences › Sociology and Political Science › Privacy, Security, and Data Protection
  • Social Sciences › Business, Management and Accounting › Strategy and Management › Digital Platforms and Economics
Keywords
price discrimination, customer data, privacy costs, duopoly, consumer surplus, data selling, digital markets, data ownership, market power

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