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| The Pricing Decision of Online Retailers Based on the Heterogeneous of Consumers’ Privacy Value |
| HOU Zemin，QI Yong，CAO Jinxia |
| Northeastern University, Shenyang, China |
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Abstract This study induces privacy value heterogeneous in the linear model, and then sets up a price competition framework for online retailers with high service capability and low service capability, reveals the impact of consumers’ privacy value heterogeneous on online retailers’ pricing decisions, and analyzes the impact of the online retailer’s technological innovation in reducing consumers’ privacy costs on social welfare. The results show that, both monopoly and duopoly can be equilibriums after inducing consumers’ privacy value, and the market structure is related to consumers’ privacy benefits difference, consumers’ privacy costs difference, and online retailers’ privacy costs difference. However, the average price of high service capability online retailer can be lower than that of the low service capability online retailer, though the high service capability online retailer could price discrimination. In addition, the high service capability online retailer always has the motivation to conduct innovation, which may decrease welfare. Under a certain condition, the coordinated development of online retailer digital construction and consumer privacy protection could be realized.
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Received: 16 October 2020
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