Privacy law relies on notice-and-consent regimes to govern data collection. This is premised on the idea that observed consent reflects users’ underlying privacy preferences. Because consent is supposed to function as an informational signal, law assigns it the role of authorizing data collection. In practice, however, consent interfaces can make some options easier to recognize or implement than others, introducing asymmetric refusal costs that may weaken the signal content of observed choices.We study this in a preregistered online experiment with German internet users (n=1,142). Holding information and the formal option set constant, we vary cookie banner designs that differ in how refusal is presented: one visually emphasizes acceptance, one places rejection behind a settings menu, and one embeds the rejection option as a low-salience text link. We relate consent choices to stated privacy concerns measured via the IUIPC-8 scale, examining both the level of consent and the relationship between stated privacy concerns and observed behavior. Alongside the IUIPC-8 scale, we elicited an incentive-based willingness-to-accept measure, which ranks participants consistently with IUIPC-8.Acceptance rises from 68% at the baseline banner to 84% and 95% under the settings-layer and embedded-link designs, while visual emphasis alone leaves it essentially unchanged at 67%. Stronger stated privacy concerns predict lower acceptance in every condition, and we find no evidence that any design attenuates this relationship. Substantial shifts in aggregate consent can therefore occur without detectable change in how stated concerns map onto choices.
This paper studies how data protection, consumer choice, and platform access rules interact. A monopolistic platform can collect user data to generate advertising revenue and provide services but faces the risk of data breaches. We compare a restricted access regime, under which only users who share data are admitted, with a consumer choice regime, under which users may access the service without sharing data. Restricted access induces greater investment in data protection but excludes users with high privacy sensitivity. This creates a trade-off between investment incentives and participation and a divergence between private and social incentives. As a result, regulation mandating user choice may weaken data protection and reduce welfare. Public fines tend to strengthen investment incentives, whereas private damage compensation has non-monotone effects on protection, profits, and welfare. Data-based price discrimination makes consumer choice more attractive to the platform but it may lead to lower data protection.
Digital wallets like Yape and Plin have gained widespread popularity in Peru, allowing users to make instant payments through quick response (QR) codes or mobile phone numbers. This paper examines the drivers of their adoption and their implications for payment choice and consumer surplus. Using market share data for six digital payment instruments and cash from January 2019 to April 2024, we estimate the demand for payment instruments and find that features such as lower fees, 24/7 immediate payments, QR code payments, and acceptance at point-of-sale (POS) terminals are associated with their rapid diffusion. Our estimates suggest that a PEN 0.01 (Peruvian Sol 0.01, equivalent to USD 0.003) increase in payer fees would reduce the market share of the digital wallets by 0.31 percentage points (pp), while debit cards and cash would gain usage. Simulations further indicate that removing 24/7 immediate transfers would reduce digital wallet usage by 15.75 pp, discontinuing POS payments by 26.01 pp, and eliminating QR code functionality by 4.45 pp. Our welfare simulations indicate that the availability of digital wallets is associated with increasing model-implied consumer surplus gains per transaction among banked consumers over time.
This paper studies how behavior-based price discrimination (BBPD) affects firms’ incentives to invest in cost-reducing R&D whose effects may depreciate, persist, or strengthen across the two selling periods, as well as the resulting welfare implications. We develop a two-period duopoly model with an initial R&D stage and horizontally differentiated products. Before period 1, firms choose their R&D effort levels. In period 1, they charge a single price to all consumers. In period 2, under BBPD, firms offer separate prices to their own previous customers and to consumers previously served by the rival. We compare equilibrium outcomes under BBPD with those under uniform pricing, under which firms also charge a single price to all consumers in period 2, to study how price discrimination affects innovation incentives and how endogenous cost reduction modifies the effects of BBPD. We characterize the conditions under which BBPD raises or lowers equilibrium R&D effort, prices, profits, consumer surplus, and social welfare.
For decades, regions such as Latin America, South Asia and Africa have favoured sector specific taxes on mobile internet consumers and providers. Despite their known negative effects on internet adoption and investments, tax authorities generally considered these as an efficient way to generate tax revenues. Since then, fast growth in internet adoption and the ensuing broad digitalization of society have been increasingly linked with greater tax revenue collection by the public sector, with a series of direct and indirect channels through which the effect takes place. We conduct novel empirical research for one of these regions, Latin America and the Caribbean (LAC), and provide robust estimates through different empirical approaches. All our results confirm positive direct and indirect links between mobile internet adoption and usage and public sector tax revenue. Importantly, the net tax collection effects of the removal of sector-specific taxes on mobile internet consumers and operators are neutral to positive depending on the simulated scenario. The results have important implications for policymakers, especially tax authorities, and highlight the large opportunity cost in these regions not just in connectivity terms but also in foregone tax revenues.
