2018
DOI: 10.1016/j.ijindorg.2018.01.003
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Privacy and platform competition

Abstract: We analyze platform competition where user data is collected to improve adtargeting. Considering that users incur privacy costs, we show that the equilibrium level of data provision is distorted and can be inefficiently high or low: if overall competition is weak or if targeting benefits are low, too much private data is collected, and vice-versa. Further, we find that softer competition on either market side leads to more data collection, which implies substitutability between competition policy measures on b… Show more

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Cited by 25 publications
(12 citation statements)
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“…Although the platform economy has received extensive attention, limitations remain. Relevant research has focused mainly on trading platforms that connect bilateral and multilateral markets (Dimakopoulos and Sudaric, 2018). Research on internal platform enterprises (Intrapreneurship mechanism) that have transformed from traditional manufacturing and service-oriented enterprise groups is inadequate (Chen et al, 2020;Wan et al, 2020).…”
Section: Introductionmentioning
confidence: 99%
“…Although the platform economy has received extensive attention, limitations remain. Relevant research has focused mainly on trading platforms that connect bilateral and multilateral markets (Dimakopoulos and Sudaric, 2018). Research on internal platform enterprises (Intrapreneurship mechanism) that have transformed from traditional manufacturing and service-oriented enterprise groups is inadequate (Chen et al, 2020;Wan et al, 2020).…”
Section: Introductionmentioning
confidence: 99%
“…For the basic service, the platform can allocate a subset of the advertisers [],σ1, under which consumers are informed of all advertisers with a matching probability over σ. Following Crampes et al (2009) and Dimakopoulos and Sudaric (2018), we assume that the total number of advertisements that a consumer sees is denoted by normalΣ=1σ (i.e., the Lebesgue measure of ). Meanwhile, referring to Jones and Mendelson (2011), digital content usually has high fixed production costs, but once developed, it has negligible reproduction and distribution costs, so the marginal cost can be zero.…”
Section: Modelmentioning
confidence: 99%
“…The corresponding theoretical work mostly presumes that more market power comes on average with more data collection by companies (Casadesus-Masanell and Hervas-Drane, 2015; Dimakopoulos and Sudaric, 2018). In this line of research, data is assumed to be valuable for firms, be it for targeted advertisement, the implementation of user-specific pricing, or as a direct possibility for revenue generation by selling the data to third parties.…”
Section: Related Literaturementioning
confidence: 99%