Abstract
We consider a duopoly model in which consumers purchase products in two independent markets: one is for data collection, and another is for data application. In the data application market, each firm can offer personalized prices to its targeted customers and a uniform price to untargeted consumers. However, each firm's targeted customers can erase their data from the database to become untargeted consumers by incurring a fixed cost before the firms offer prices. We show that privacy management harms the total surplus, firms, and consumers, except for opt-out consumers in the data application market. Consumers' privacy management also intensifies competition in the data collection market, lowering the two-market profits and benefiting consumers in this market. We extend the model in several directions.