Anonymity, Digital Currency, and Consumer Privacy Monetization - Part 2

The first result is that payment data has catalyzed the formation of a "data monopoly." If a company has an early advantage in obtaining information, it will actively discriminate against prices to expand its share of consumer data and monopolize the market in the long run. In such a market, we find that monopolies control most of the data and can provide products far superior to their competitors. Given that companies want to obtain data from consumers to maximize profits, this gap in product quality allows companies to set differentiated prices between different payment types, and consumers can only get a small amount of surplus from their data.

Interestingly, policies aimed at breaking the data monopoly may not benefit consumers. We have proved that data sharing policies can restore competition in monopolistic markets by improving the ability of other companies to produce competitive products. However, fiercer competition has weakened every company's ability to incentivize consumers to provide data at discounts through digital payments. Although consumers earn a certain share of surplus in a fiercely competitive market, the size of the surplus may be reduced relative to a company that has more concentrated data.