2374. Mandating Privacy Spillovers: Interoperability in Data Markets
Invited abstract in session TC-8: Strategic Behavior in Modern Markets, stream Game Theory and Behavioral Management Science.
Thursday, 11:45-13:15Room: H8
Authors (first author is the speaker)
| 1. | Alexander Rasch
|
| Düsseldorf Institute for Competition Economics (DICE) |
Abstract
We study the effects of mandating interoperability in a network market. We model competition between an incumbent service that employs a data-driven business model in exchange for 'free' access to the service and a privacy-preserving entrant. On the user side, there are direct network effects and users are privacy conscious. We characterize market outcomes with and without interoperability and find that interoperability may induce data or privacy spillovers as user data are transferred across different services. Because mandating interoperability results in higher data collection levels, it can hurt user welfare if these privacy spillovers are sufficiently large. Moreover, the entrant's market share also decreases when privacy spillovers are large, that is, contestability is limited. Furthermore, we study the business model choice of the entrant.
Keywords
- Economic Modeling
- Social Networks
Status: accepted
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