Impact of the Invisibles: Personalized Pricing on Platform with Privacy-Preserving Users

As new data privacy regulations tighten consumer data access, e-commerce platforms face a growing population of anonymous users who choose not to share their personal information. This paper examines how such anonymity reshapes competitive dynamics in digital marketplaces. We develop a two-stage theoretical model where, in the first stage, the platform designs customer segmentation, and in the second stage, both the platform and third-party sellers engage in differential pricing. We introduce the concept of "fuzzy segmentation"-a strategy that combines anonymous users with selectively grouped data-sharing consumers. This approach enables platforms to soften competition and extract higher profits, challenging the classical view that segmentation necessarily intensifies price rivalry. Surprisingly, we find that anonymous consumers, despite opting for privacy, may still face a price premium at equilibrium. Additionally, data-sharing consumers who prefer third-party sellers may also experience negative spillovers, paying higher prices due to their inclusion in mixed segments. Our findings reveal a critical trade-off: while privacy regulations empower consumers to protect their data, they may inadvertently lead to higher prices for both anonymous and certain data-sharing consumers, reducing overall consumer welfare. This study sheds light on the strategic importance of segmentation in platform markets and offers fresh insights into the unintended consequences of data privacy regulations.

• 저널Information Systems Research
• 토픽Digital Platforms and Economics · Strategy and Management
• DOI10.1287/isre.2025.2166
• 저자Julie B. Wang