Constantatos, C., "Data Acquisition, Price Discrimination and Endogenous Consumer Privacy"

Title: "Data Acquisition, Price Discrimination and Endogenous Consumer Privacy"

Speaker: Professor Constantatos Christos, University of Macedonia

Host:  Assistant Professor Efthymios Athanasiou, Department of Economics, Athens University of Economics and Business

Room:  76, Patission Str., Antoniadou Wing, 3rd floor, Room A36

Abstract: This paper studies the strategic and welfare effects of endogenous consumer privacy in a differentiated duopoly with heterogeneous consumers. Individuals can choose to conceal their data either ex ante, before firms set prices, or ex post, after observing prices. The timing of this choice fundamentally shapes market outcomes: ex ante privacy leads to symmetric prices and higher consumer surplus and welfare relative to full personalization, while ex-post privacy induces price dispersion, softens competition, and reduces welfare. The relative welfare of endogenous privacy versus full anonymity depends critically on the relative density of new consumers: for low densities, both privacy regimes enhance welfare, whereas for high densities, full anonymity dominates. These results highlight that the effects of “opt-in” versus “opt-out” policies depend on both the timing of consumer decisions and market composition.