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Data-Driven Envelopment with Privacy-Policy Tying

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  • Daniele Condorelli
  • Jorge Padilla

Abstract

We present a theory of monopoly protection by means of entry in adjacent markets that have a common customer base (i.e., envelopment). A firm dominant in its market enters a data-rich secondary market and engages in predatory pricing and privacy-policy tying. We define the latter as conditioning service provision to the subscription of a privacy policy that allows bundling of user data across all sources. Acquiring data from the secondary market confers an advantage in the data-intensive primary market that shields the dominant firm from entry, thus harming consumers. We discuss potential remedies, including data unbundling and portability.

Suggested Citation

  • Daniele Condorelli & Jorge Padilla, 2024. "Data-Driven Envelopment with Privacy-Policy Tying," The Economic Journal, Royal Economic Society, vol. 134(658), pages 515-537.
    • Handle: RePEc:oup:econjl:v:134:y:2024:i:658:p:515-537.
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    File URL: http://hdl.handle.net/10.1093/ej/uead090
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    Cited by:

    1. Martin Peitz, 2024. "The Economic Theory of Two-Sided Platforms," CRC TR 224 Discussion Paper Series crctr224_2024_584, University of Bonn and University of Mannheim, Germany.
    2. Shuaicheng Liu, 2024. "Privacy regulation in asymmetric environments," Journal of Regulatory Economics, Springer, vol. 66(2), pages 157-173, December.

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