Journal of Economic Theory and Econometrics: Journal of the Korean Econometric Society
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Journal of Economic Theory and Econometrics
JETEM/계량경제학보/計量經濟學報/JKES
Journal of the Korean Econometric Society

Collection of Personal Data with Information Externality in Two-Sided Markets

Vol.31, No.3, September , 1–22



  •   (Korea University)

  •   (Korea University)

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Abstract  

We study the conditions under which an internet platform excessively collects personal information when information externality exists. A monopolistic 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 advertisements. 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.


Keywords
   Privacy, Personal Information, Private Information, Information Externality, Two-Sided Market

JEL classification codes
   D62, L12, L86
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