The Effects of Personal Data Management on Competition and Welfare

Cong, Jiajia; Matsushima, Noriaki

The Effects of Personal Data Management on Competition and Welfare

Cong, Jiajia; Matsushima, Noriaki

Institute of Social and Economic Research Discussion Papers, 2023, 1201, 1-55

Number of Access:256（2025-07-24 04:34 Counts）

Identifier to cite or link to this item: https://hdl.handle.net/11094/91205

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Title	The Effects of Personal Data Management on Competition and Welfare
Creator	CreatorName Cong, Jiajia
Creator	NRID 1000080334879 1000080334879 ORCID 0000-0002-7865-3875 0000-0002-7865-3875 researchmap permalink read0116301 read0116301 Scopus Author ID 7005645778 7005645778 CreatorName Matsushima, Noriaki
Subject	privacy management
	data collection
	data application
	price discrimination
	privacy laws
Abstract	This study examines how consumers’ personal data management affects firms’ competition in the data collection and data application markets and welfare outcomes. Consumers purchase products from differentiated firms in two markets. Firms compete to collect consumer data first to predict their preferences in the data application market, where each firm offers personalized prices to its targeted consumers and a uniform price to untargeted consumers. Before firms offer prices, their targeted consumers can erase data to become untargeted for a fixed cost. We show that consumers’ privacy management mitigates price competition, reduces firms’ profits, and harms consumer surplus and social welfare in the data application market; privacy management intensifies competition and improves consumer surplus in the data collection market. Across these two markets, profits and social welfare decline. The change in consumers’ two-market surplus depends on their foresight regarding the outcomes in the data application market, with only forward-looking consumers having a higher surplus. We extend the model in several directions, including data-enabled product personalization, privacy costs, data portability, and data ownership, and discuss the implications for privacy laws.
Publisher	The Institute of Social and Economic Research, Osaka University
Source Title	Institute of Social and Economic Research Discussion Papers
Volume (Issue)	1201
Page	1-55
Date of Issued	2023-03
Language	English
Handle URL	https://hdl.handle.net/11094/91205
PISSN	0473453X
eISSN	24350982
Relation.references	URI https://www.iser.osaka-u.ac.jp/static/resources/docs/dp/2023/DP1201.pdf
Access Rights	metadata only access
Category	ディスカッション／ワーキング・ペーパー DP/WP
Category	Institute of Social and Economic Research Discussion Papers

Resource Type	technical report
Local Type	DP/WP
DCMI Type	Text
DCTERMS.bibliographicCitation	Institute of Social and Economic Research Discussion Papers. 2023, 1201, p. 1-55
DC.title	The Effects of Personal Data Management on Competition and Welfare
DC.creator	Cong, Jiajia
DC.creator	Matsushima, Noriaki
DC.publisher	The Institute of Social and Economic Research, Osaka University
DC.language' scheme='DCTERMS.RFC1766	English
DC.type' scheme='DCTERMS.DCMIType	Text
DCTERMS.issued' scheme='DCTERMS.W3CDTF	2023-03
DC.relation' scheme='DCTERMS.URI	https://www.iser.osaka-u.ac.jp/static/resources/docs/dp/2023/DP1201.pdf
DC.subject	privacy management
	data collection
	data application
	price discrimination
	privacy laws
DCTERMS.abstract	This study examines how consumers’ personal data management affects firms’ competition in the data collection and data application markets and welfare outcomes. Consumers purchase products from differentiated firms in two markets. Firms compete to collect consumer data first to predict their preferences in the data application market, where each firm offers personalized prices to its targeted consumers and a uniform price to untargeted consumers. Before firms offer prices, their targeted consumers can erase data to become untargeted for a fixed cost. We show that consumers’ privacy management mitigates price competition, reduces firms’ profits, and harms consumer surplus and social welfare in the data application market; privacy management intensifies competition and improves consumer surplus in the data collection market. Across these two markets, profits and social welfare decline. The change in consumers’ two-market surplus depends on their foresight regarding the outcomes in the data application market, with only forward-looking consumers having a higher surplus. We extend the model in several directions, including data-enabled product personalization, privacy costs, data portability, and data ownership, and discuss the implications for privacy laws.
DC.format	91205
citation_title	The Effects of Personal Data Management on Competition and Welfare
citation_author	Cong, Jiajia
citation_author	Matsushima, Noriaki
citation_publisher	The Institute of Social and Economic Research, Osaka University
citation_language	English
citation_date	2023-03
citation_journal_title	Institute of Social and Economic Research Discussion Papers
citation_volume	1201
citation_firstpage	1
citation_lastpage	55
citation_public_url	https://hdl.handle.net/11094/91205
citation_abstract_html_url	https://www.iser.osaka-u.ac.jp/static/resources/docs/dp/2023/DP1201.pdf

The Effects of Personal Data Management on Competition and Welfare

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