Price discrimination and product quality under opt-in privacy regulation
We study how privacy regulation limiting the scope for price discrimination by a monopolist who sells online affects product quality and consumer surplus. We consider an opt-in regime where consumers may share personal data or not, in line with the recent EU GDPR. If consumers share data, they gain an additional benefit from buying related to the complementarity between information and quality, and they pay personalized prices instead of a uniform price. We find that, if the complementarity is strong enough, then product quality is higher with than without the opt-in regime.