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Optimal two-part tariff contract between data provider and data platform operator under information asymmetry in data protection levels
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- Authors
- Sangbaek Woo, Jihyeok Jung, Deok-Joo Lee
- Issue Date
- 2026-10
- Citation
- Expert Systems with Applications, v.328, pp.1-17
- ISSN
- 0957-4174
- Publisher
- Elsevier
- Language
- English
- Type
- Journal Article
- Abstract
- As data has emerged as an important economic asset in the digital economy, data trading platforms have grown rapidly. However, one of the potential barriers to this growth is the difficulty of securing high quality data. Since data quality is closely related to data provider’s privacy concerns, they often adopt data protection techniques, which inevitably create a tradeoff between data protection level and data quality. Since the platform operator generally cannot observe the actual protection level, data contract design should consider this information asymmetry to ensure market efficiency. To address this issue, this study develops a game-theoretic model to design optimal two-part tariff contracts under both full and asymmetric information about data protection levels. Compared to the full information benchmark, the asymmetric information environment leads to differentiated fee structures. Low-protection providers face zero usage fees with higher fixed fees, while high-protection providers face positive usage fees with lower fixed fees, which induces truthful self-selection. Moreover, sensitivity analysis with numerical parameters shows how market composition, quality sensitivity, and the impact of protection on quality influence equilibrium prices, fees, and the resulting profits. The findings provide theoretical insights and managerial implications for platform operators, data providers, and policymakers in designing data trading mechanisms that balance data privacy and quality.
- Keyword
- Data contract, Two-part tariff, Data protection, Data quality, Information asymmetry
- KSP Keywords
- Asymmetric information, Data Platform, Data Providers, Data Quality, Digital Economy, Game-theoretic model, High Quality Data, Influence equilibrium, Information Asymmetry, Information environment, Market efficiency