An Analysis of Dynamic Game Strategy of Privacy Protection in Personalization

E-business enterprises provide personalize services for customers based on their privacy information. However, customers benefit from personalization while suffering from privacy concern. The tradeoff between consumers’ benefit function and firms’ earnings function are explored when an incumbent adopts privacy protection in perfect monopoly market. It also found that when the potential entrant entered into the market, the incumbent that adopted privacy protection can maintain more market shares than one not adopted. At last, we extended this paper and further found that if potential entrant entered into the market with privacy protection would lose more profit because of the large cost of privacy protection. This means the privacy protection that the incumbent adopted has played a certain barriers to entrant.