Recently, Professor Zhu Yu of the School of Economics of Renmin University of China (RUC) published an article titled “Does Competition Reduce Firms’ Collection of Consumer Information and Increase Privacy Protection Investment?” in the Journal of Management World, one of the top academic journals in the field of economy and management. Another two co-authors are Zhang Zhongyuan, Ph.D. student of the School of Economics, RUC, and Jiao Qian, Associate Professor of the Lingnan College, Sun Yat-Sen University.

Zhu Yu’s main research fields include information economics, industrial organization theory and digital economy. His research results published in the Journal of Journal of Public Economics, Journal of Economics Theory, Management Science, Games and Economic Behavior, and other well-known international and domestic economic journals.

Abstract

How to solve the problems of excessive collection of consumer information and privacy information protection is a major issue in the digital economy era. From the two perspectives of enterprise information collection policy and privacy protection investment decision-making, this paper constructs a differentiated duopoly model to explore the impact of market competition mechanism on enterprise information collection intensity and privacy protection investment. The results show that when information is observable, competition will reduce the intensity of information collection and increase the level of investment in privacy protection. Compared with oligopolistic competition, firms under monopoly will collect more consumer information and invest less in privacy protection. Furthermore, this paper introduces government supervision under the circumstance that the actual information is unobservable, and finds that strengthening supervision will strengthen the effect of competition mechanism on consumer privacy protection, revealing the complementary relationship between market competition mechanism and government supervision. Therefore, creating a good competitive environment and encouraging companies to use information collection and privacy protection as a means of market competition is an important way to solve data governance problems.