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Disclosure-based price discrimination by information exchange platforms
Jönköping University, Jönköping International Business School, JIBS, Economics.
Jönköping University, Jönköping International Business School, JIBS, Economics.ORCID iD: 0000-0003-4338-908X
2017 (English)In: Information Economics and Policy, ISSN 0167-6245, E-ISSN 1873-5975, 1-13 p.Article in journal (Refereed) Epub ahead of print
Abstract [en]

Consumers often face a trade off when considering whether to share more information with firms - for example, by letting an app access their list of contacts, location or browsing history. More precise information can help the sellers to make more targeted offers, and can yield multiple relevant offers and lower prices. However, information disclosure can entail costs via identity theft, fraud, extortion etc. In this paper, we explore this trade-off in a model in which a monopoly platform can gather personal customer information, and offer it to other sellers. The consumers differ relatively to their aversion to information disclosure, and the platform can offer them menus with different disclosure levels. In equilibrium, options featuring greater disclosure levels command a premium, and information about the consumers choosing them is sold to the sellers at a lower price. If we compare scenarios with alternative menus, a greater number of options corresponds to a greater average disclosure level and a greater surplus. If the potential surplus from the induced exchanges is relatively large, equilibrium with a binary menu features levels of the platform’s profit and the surplus close to those achieved with a continuum of offers.

Place, publisher, year, edition, pages
Elsevier, 2017. 1-13 p.
Keyword [en]
Information disclosure, Two-sided platforms, Price discrimination
National Category
Economics
Identifiers
URN: urn:nbn:se:hj:diva-37329DOI: 10.1016/j.infoecopol.2017.08.003Scopus ID: 2-s2.0-85028997718OAI: oai:DiVA.org:hj-37329DiVA: diva2:1142335
Available from: 2017-09-19 Created: 2017-09-19 Last updated: 2017-09-25

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CiteExportLink to record
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Citation style
  • apa
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  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
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  • asciidoc
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