Data transactions are currently experiencing rapid growth on online platforms, yet societal concerns over privacy and security have sparked intense debate. Therefore, striking a tradeoff between the effective use of consumer data and privacy remains an urgent issue for businesses and consumers.
A game-theoretic framework involving data transactions between the platform and the competing merchants operating on it is proposed, incorporating consumer privacy concerns and privacy protection behavior into the analysis. This study analyzes the effects of privacy on strategic data marketing decisions on the platform and explores the merchant pricing and consumers’ information decisions under the data trading mechanism, as well as resulting welfare implications.
This study finds that while consumer privacy protection may benefit some old consumers under specific circumstances, overall consumer welfare tends to be higher in the absence of privacy protection. Thus, it is suggested that regulatory authorities should encourage fair competition in the application of big data and avoid overly restricting enterprises from collecting and using consumers’ non-sensitive information. Moreover, the interplay of external consumer privacy concerns and internal data analytics capabilities is critical in shaping optimal platform data trading strategies.
This paper is pioneering in investigating the interplay between data transactions and privacy concerns. It also challenges the conventional belief that data asset management and the formulation of regulations aimed at protecting consumer privacy.
