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Privacy Regulation and Market Structure

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Listed:
  • James Campbell
  • Avi Goldfarb
  • Catherine Tucker

Abstract

This paper models how regulatory attempts to protect the privacy of consumers' data affect the competitive structure of data‐intensive industries. Our results suggest that the commonly used consent‐based approach may disproportionately benefit firms that offer a larger scope of services. Therefore, though privacy regulation imposes costs on all firms, it is small firms and new firms that are most adversely affected. We then show that this negative effect will be particularly severe for goods where the price mechanism does not mediate the effect, such as the advertising‐supported Internet.

Suggested Citation

  • James Campbell & Avi Goldfarb & Catherine Tucker, 2015. "Privacy Regulation and Market Structure," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 24(1), pages 47-73, March.
    • Handle: RePEc:bla:jemstr:v:24:y:2015:i:1:p:47-73
    DOI: 10.1111/jems.12079
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    References listed on IDEAS

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