What lemons teach us about privacy and competition
Click here to read the full article onlineDrawing upon Akerlof’s The Market for Lemons, the paper argues that information asymmetries prevent consumers from monitoring and punishing firms when they break their privacy promises. For this reason firms regardless of size, and even in competitive markets have incentives to over-promise privacy, and under-deliver. As a result, privacy violations cannot be used as evidence either of market power, or of exclusionary conduct.