Collection of personal data with information externality in two-sided markets

Hyungjin Kim, Jinhyuk Lee

Research output: Contribution to journalArticlepeer-review

Abstract

We study the conditions under which an internet platform exces-sively collects personal information when information externality exists. A mo-nopolistic platform runs two-sided business where users and firms form each side. Users do not pay fees to the platform, but firms pay for targeted advertise-ments. In an environment where marginal information externality is large, the amount of personal information collected exceeds social optimum i) when the utility of marginal user does not make up for the aggregate disutility of existing users and firms and ii) when the platform extracts large markup from firms to keep users.

Original languageEnglish
Pages (from-to)1-22
Number of pages22
JournalJournal of Economic Theory and Econometrics
Volume31
Issue number3
Publication statusPublished - 2020

Keywords

  • Information Externality
  • Personal Information
  • Privacy
  • Private Information
  • Two-Sided Market

ASJC Scopus subject areas

  • Economics and Econometrics

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