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Consumer privacy and serial monopoly
Author(s) -
Bhaskar V.,
Roketskiy Nikita
Publication year - 2021
Publication title -
the rand journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.687
H-Index - 108
eISSN - 1756-2171
pISSN - 0741-6261
DOI - 10.1111/1756-2171.12396
Subject(s) - consumption (sociology) , monopoly , ex ante , economic surplus , consumer welfare , economics , microeconomics , consumer choice , welfare , business , market economy , social science , sociology , macroeconomics
Abstract We examine the implications of consumer privacy when preferences today depend upon past consumption choices, and consumers shop from different sellers in each period. Although consumers are ex ante identical, their initial consumption choices cannot be deterministic. Thus, ex post heterogeneity in preferences arises endogenously. Consumer privacy improves social welfare, consumer surplus and the profits of the second‐period seller, while reducing the profits of the first period seller, relative to the situation where consumption choices are observed by the later seller.