Privacy laws designed to stop price-fixing can actually make it easier for companies to coordinate and overcharge you.
April 26, 2026
Original Paper
Personalized vs. Uniform Algorithm Design: The Unintended Consequence of Restrictions in Data Access
SSRN · 6617618
The Takeaway
Restrictions on data access incentivize firms to use uniform algorithm designs that facilitate secret collusion. When companies are blocked from seeing personalized data, they default to simpler models that move in sync with their competitors. Regulators assume that protecting consumer data is a guaranteed way to promote fair competition. This research shows that these laws can accidentally create the very price-gouging outcomes they were built to prevent. It means that the fight for privacy and the fight for low prices are often at odds.
From the abstract
This paper investigates the unintended consequences of restricting third-party pricing algorithm providers' access to firms' private cost data. We model a monopoly provider serving competing firms characterized by heterogeneous costs and demand volatility, comparing two design regimes: Personalized Design (PD), which tailors algorithms using private data, and Uniform Design (UD), where data restrictions necessitate a standardized algorithm. While PD maximizes information value through precise de