Effect of Delicate Data Collection by Relevance on Interaction Between Consumers and Service Provider

This study examines the interaction between consumers and service providers, focusing on privacy concerns and data collection practices. The results indicate that while providers may benefit from collecting all available data, this can lead to significant consumer privacy concerns, reducing overall profit and market share. The model result indicates that there exist situations where implementing price discrimination could increase the provider's profit while enhancing social welfare. By increasing prices for consumers who refuse data collection, the provider can offset its revenue losses. As more regions enforce consent requirements for data collection, price discrimination could become the optimal strategy for both providers and society. Future research should explore scenarios involving perfect price discrimination and optimal proportions of service-relevant and irrelevant data collection. Additionally, compensating consumers for data disclosure, rather than solely relying on price discrimination, warrants further investigation to assess its impact on overall outcomes.