# Consumer Privacy and Serial Monopoly

## TL;DR

This paper analyzes how consumer privacy affects market dynamics when preferences depend on past consumption, showing privacy benefits social welfare and second-period profits but reduces first-period seller profits.

## Contribution

It introduces a model where consumer preferences evolve with past choices, highlighting the endogenous heterogeneity and the impact of privacy on market outcomes.

## Key findings

- Privacy enhances social welfare and consumer surplus.
- Privacy increases second-period seller profits.
- Privacy decreases first-period seller profits.

## Abstract

We examine the implications of consumer privacy when preferences today depend upon past consumption choices, and consumers shop from different sellers in each period. Although consumers are ex ante identical, their initial consumption choices cannot be deterministic. Thus ex post heterogeneity in preferences arises endogenously. Consumer privacy improves social welfare, consumer surplus and the profits of the second-period seller, while reducing the profits of the first period seller, relative to the situation where consumption choices are observed by the later seller.