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Competing for consumer data and privacy: A unified framework for data collection and protection

Author

Listed:
  • Ding, Chuan
  • Wang, Zhiyu
  • Wang, Liyuan
  • Zhao, Jianrong

Abstract

This paper develops a framework to analyze separately firms’ data collection and protection strategies in competitive markets. We examine how these strategies impact market competition, consumer decisions, and social welfare under two market structures: monopoly and duopoly. Compared to the monopoly case, firms in a duopoly reduce data collection and increase investments in data protection. Increased competition, influenced by service differentiation, incentivizes firms to adjust their data strategies to attract consumers. Our analysis also explores the role of regulatory policies, such as minimum data protection standards and liability fines, in reducing data collection distortions and improving market outcomes. We show that when regulators emphasize consumer welfare, such policies can guide firms’ strategies to align to maximize social welfare. Extensions of the model further explore network effects, subscription fees, and data breach costs, demonstrating the robustness of our main results.

Suggested Citation

  • Ding, Chuan & Wang, Zhiyu & Wang, Liyuan & Zhao, Jianrong, 2026. "Competing for consumer data and privacy: A unified framework for data collection and protection," European Journal of Operational Research, Elsevier, vol. 332(3), pages 924-935.
    • Handle: RePEc:eee:ejores:v:332:y:2026:i:3:p:924-935
    DOI: 10.1016/j.ejor.2025.12.004
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