“For the public benefit”: Data policy in platform markets

Abstract

We consider the public-good aspect of platform's data collection on users. Data have commercial benefits to the platform, personal benefits to the user, and public benefits to other users. We ask who should decide which data the platform commercializes. We find that the answer depends on the type of heterogeneity in the disutility of data commercialization. When heterogeneity is across users (data items) and the public benefit of data is high (low), it is welfare enhancing to let the platform (users) control the data. Furthermore, dynamic data accumulation strengthens our results.