Viability of a Privacy-differentiated Market for Free Online Services
summary
Models two free-service rivals (Google vs DuckDuckGo) as a Hotelling duopoly model on an epsilon privacy line with linear cost/revenue, uniform consumer types and a mapping of privacy to QoS via factor T. Uses a three-stage sequential game solved by backward induction to show a subgame-perfect Nash equilibrium exists (providers never choose identical epsilons). Key quantitative findings: a provider’s non-private revenue increases its market share; larger consumer valuation of privacy (higher T) softens competition; higher cost of high-QoS narrows differentiation.
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chapters (11)
- 0:00Introduction
- 0:27Privacy
- 2:08Privacy differentiation
- 8:13No pricing
- 9:11Two rational parties
- 9:40Cost models
- 11:12Hotelling model
- 18:20CDFI
- 23:42Game Play
- 30:52Equilibrium
- 37:25Results
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