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 language | English |
|---|---|
| Pages (from-to) | 1-22 |
| Number of pages | 22 |
| Journal | Journal of Economic Theory and Econometrics |
| Volume | 31 |
| Issue number | 3 |
| Publication status | Published - 2020 |
Bibliographical note
Funding Information:∗We thank Wonki Cho, Euncheol Shin and two anonymous reviewers for their helpful suggestions and comments. Jinhyuk Lee’s work is supported by a Korea University Grant (K1710031). †Korea University, Seoul, Korea. Email: [email protected] ‡Korea University, Seoul, Korea. Email: [email protected]. Corresponding author.
Publisher Copyright:
© 2020, Korean Econometric Society. All rights reserved.
Keywords
- Information Externality
- Personal Information
- Privacy
- Private Information
- Two-Sided Market
ASJC Scopus subject areas
- Economics and Econometrics