Online privacy and market structure: Theory and evidence

Arbeitspapier

This paper investigates how privacy regulation affects the structure of online markets. We provide a simple theoretical model capturing the basic trade-off between the degree of privacy intrusion and the informativeness of advertising. We derive empirically testable hypotheses regarding a possibly asymmetric effect of privacy regulation on large and small firms using a diff-diff-diff model with heterogeneous treatment timing. Our theoretical model predicts that privacy regulation may affect predominantly large firms, even if - as our data confirms - these large firms tend to offer more privacy. Our empirical results show that, if any, only large firms were negatively affected, suggesting that privacy regulation might boost competition by leveling out the playing field for small firms.

Object Details

• ISBN: 978-3-86304-307-0
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: DICE Discussion Paper ; No. 308

Classification and Topics

• Classification: Wirtschaft ; Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection ; Information and Internet Services; Computer Software ; Advertising ; Marketing and Advertising: Government Policy and Regulation
• Subject: Privacy ; Competition ; Regulation ; ePrivacy Directive

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Sabatino, Lorien ; Sapi, Geza
• Event: Veröffentlichung
• (who): Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE)
• (where): Düsseldorf
• (when): 2019

Further information

• Handle: http://hdl.handle.net/10419/192877
• Last update: 10.03.2025, 11:42 AM CET