The second type of exploitation

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The logical conclusion is that Amazon is willing to subsidize consumers in order to exploit their personal information because the additional revenues generated in the process exceed the consumer disutility incurred. Clearly personal consumer information is a valuable asset in the marketplace. To better understand the implications of consumer information for firms we have built a formal model to analyze the information exploitation dichotomy outlined above.

We take the view that there are two types of exploitation one which is beneficial to consumers and one which is not. The first type of exploitation improves the quality of the service and provides a rationale for consumers Chinese Overseas America Number Data to provide their personal information to the firm. generates disutility for consumers but enables the firm to tap into additional revenue sources. We use the term disclosure to denote this second type of exploitation since it frequently implies participation of third parties such as advertisers.





Note that both forms of exploitation are compatible and may coexist on the same service as in the Amazon example. The difference between the two types of information exploitation is stark but it turns out to be quite useful to analyze the effects of privacy on competition. Consumers are the gatekeepers of their personal information and choose whether to sign up for the firm s service and how much personal information to provide.