Consumer flexibility, data quality and location choice

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractWe analyze …rms'location choices in a Hotelling model with two-dimensional consumer heterogeneity, along addresses and transport cost parameters ( ‡exibility). Firms can price discriminate based on perfect data on consumer addresses and (possibly) imperfect data on consumer ‡exibility. We show that …rms'location choices depend on how strongly consumers di¤er in ‡exibility. Precisely, when consumers are relatively homogeneous, equilibrium locations are socially optimal regardless of the quality of customer ‡exibility data. However, when consumers are relatively di¤erentiated, …rms make socially optimal location choices only when customer ‡exibility data is perfect. These results are driven by the optimal strategy of a …rm on its turf, monopolization or market-sharing, which in turn depends on consumer heterogeneity in ‡exibility. Our analysis is motivated by the availability of customer data, which allows …rms to practice third-degree price discrimination based on both consumer characteristics relevant in spatial competition, addresses and transport cost parameters.JEL-Classi…cation: D43; L13; R30; R32.

Information security investment and purchase decision for personalized products

“…Let μ ¼ 0:5, which means a medium level of intrinsic vulnerability. In addition, we set μ ¼ 2ð1 À vÞ=3, and w ¼ ð1 À vÞ=3, referring to the survey conducted by the Harris Poll on different privacy concerns of people (Baye & Hasnas, 2017;Poll, 2018). We have the following observations from Figures 6 and 7:…”

“…For example, a classic classification of consumers based on privacy attitudes consists of privacy conservatives, privacy pragmatists, and privacy unconcerned (Westin, 2003). In addition, studies suggest that privacy concerns have negative effects on the willingness of information disclosure in transactions, and people with serious privacy concerns may refuse to provide personal information, offer false information for businesses, or delete personal online information (Baye & Hasnas, 2017; Xu et al, 2012). Furthermore, privacy calculus is considered as an antecedent of information disclosure and other behavioral reactions (Awad & Krishnan, 2006; Culnan & Armstrong, 1999; Acquisti et al, 2015; Baye & Hasnas, 2017; Wottrich et al, 2018).…”

“…In addition, studies suggest that privacy concerns have negative effects on the willingness of information disclosure in transactions, and people with serious privacy concerns may refuse to provide personal information, offer false information for businesses, or delete personal online information (Baye & Hasnas, 2017; Xu et al, 2012). Furthermore, privacy calculus is considered as an antecedent of information disclosure and other behavioral reactions (Awad & Krishnan, 2006; Culnan & Armstrong, 1999; Acquisti et al, 2015; Baye & Hasnas, 2017; Wottrich et al, 2018). It refers to a comprehensive assessment of individuals between the potential loss and the expected benefit of information disclosure and the ultimate behaviors depend on the outcome of the privacy tradeoff (Awad & Krishnan, 2006; Dinev & Hart, 2006).…”

“…Let , which means a medium level of intrinsic vulnerability. In addition, we set , and , referring to the survey conducted by the Harris Poll on different privacy concerns of people (Baye & Hasnas, 2017; Poll, 2018). We have the following observations from Figures 6 and 7: Under Nash equilibrium, the firm has no incentive to protect privacy, and the profits of the firm will decrease proportionally with the proportion of the waverers.…”