NO : WP-2024-004
AUTHOR : Rupayan Pal and Sumit Shrivastav
TITLE : Privacy Regulation, Cognitive Ability, and Stability of Collusion
ABSTRACT :
This article analyzes implications of privacy regulation on stability of tacit collusion. It shows that privacy regulation is likely to hurt consumers’ economic benefits, through its competition dampening effect. A more effective broad scope privacy regulation makes collusion more likely to be stable, regardless of the level of consumers’ cognitive ability. Whereas, if the scope of privacy regulation is narrow, (a) its effectiveness positively (does not) affect collusion stability under limited (unlimited) cognitive ability of consumers and (b) the likelihood of collusion stability is decreasing in the level of consumers’ cognitive ability. Our insights are relevant for designing privacy regulation.
Key words: Privacy Regulation; Limited Cognitive Ability; Behavior-based Price Discrimination; Stability of Collusion; Level-k Thinkin
JEL Code: D43, L13, L88, L86
Weblink: http://www.igidr.ac.in/pdf/publication/WP-2024-004.pdf
