Economic Analysis of Privacy Enhancing Technologies (PETs) and Adoption Strategy

This paper analyses how privacy enhancing technologies can be utilized as firm’s competitive strategy for the data market. This paper uses an economic model to investigate how firms adopt privacy enhancing technologies when consumers feel psychological privacy costs. This paper shows that firms will adopt privacy enhancing technologies as more consumers tend to be a privacy awareness group and consumers’ psychological privacy costs increase. However, the firm can hesitate to adopt privacy enhancing technologies as privacy awareness group and psychological privacy costs increase when privacy breach probability without privacy enhancing technologies is too high.