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Data Linkages and Privacy Regulation

Author

Listed:
  • Rossella Argenziano
  • Alessandro Bonatti

Abstract

We assess the efficacy of privacy regulation when consumers are privacy conscious. We develop a model of data linkages where a consumer interacts sequentially with two firms: One firm collects data on consumer behavior, and the other firm leverages the data to set a quality level and a price. A data linkage benefits the consumer in equilibrium when the recipient firm is sufficiently similar to the collecting firm. We endogenize linkage formation under several existing privacy regulations. Voluntary consent requirements benefit consumers in equilibrium, but blanket bans on discriminatory price and quality offers harm them.

Suggested Citation

  • Rossella Argenziano & Alessandro Bonatti, 2026. "Data Linkages and Privacy Regulation," American Economic Journal: Microeconomics, American Economic Association, vol. 18(3), pages 317-360, August.
    • Handle: RePEc:aea:aejmic:v:18:y:2026:i:3:p:317-60
    DOI: 10.1257/mic.20250190
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    More about this item

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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