Abstract
We provide a theoretical model of privacy in which data collection requires consumers’ consent and consumers are fully aware of the consequences of such consent. Nonetheless, excessive collection of personal information arises in the monopoly market equilibrium which results in excessive loss of privacy compared to the social optimum. The main mechanism for this result is information externalities and users’ coordination failure in which some users’ decision to share their personal information may allow the data controller to infer more information about non-users. We also show that the emergence of data brokerage industry can facilitate the collection and monetization of users’ personal data even in a fragmented market where no individual website has incentives to do so independently due to scale economies in data analytics. We discuss policy implications of our analysis in light of the recent EU General Data Protection Regulation (GDPR).
| Original language | English |
|---|---|
| Pages (from-to) | 113-124 |
| Number of pages | 12 |
| Journal | Journal of Public Economics |
| Volume | 173 |
| DOIs | |
| Publication status | Published - 2019 May |
Fingerprint
All Science Journal Classification (ASJC) codes
- Finance
- Economics and Econometrics
Cite this
}
Privacy and personal data collection with information externalities. / Choi, Jay Pil; Jeon, Doh Shin; Kim, Byung Cheol.
In: Journal of Public Economics, Vol. 173, 05.2019, p. 113-124.Research output: Contribution to journal › Article
TY - JOUR
T1 - Privacy and personal data collection with information externalities
AU - Choi, Jay Pil
AU - Jeon, Doh Shin
AU - Kim, Byung Cheol
PY - 2019/5
Y1 - 2019/5
N2 - We provide a theoretical model of privacy in which data collection requires consumers’ consent and consumers are fully aware of the consequences of such consent. Nonetheless, excessive collection of personal information arises in the monopoly market equilibrium which results in excessive loss of privacy compared to the social optimum. The main mechanism for this result is information externalities and users’ coordination failure in which some users’ decision to share their personal information may allow the data controller to infer more information about non-users. We also show that the emergence of data brokerage industry can facilitate the collection and monetization of users’ personal data even in a fragmented market where no individual website has incentives to do so independently due to scale economies in data analytics. We discuss policy implications of our analysis in light of the recent EU General Data Protection Regulation (GDPR).
AB - We provide a theoretical model of privacy in which data collection requires consumers’ consent and consumers are fully aware of the consequences of such consent. Nonetheless, excessive collection of personal information arises in the monopoly market equilibrium which results in excessive loss of privacy compared to the social optimum. The main mechanism for this result is information externalities and users’ coordination failure in which some users’ decision to share their personal information may allow the data controller to infer more information about non-users. We also show that the emergence of data brokerage industry can facilitate the collection and monetization of users’ personal data even in a fragmented market where no individual website has incentives to do so independently due to scale economies in data analytics. We discuss policy implications of our analysis in light of the recent EU General Data Protection Regulation (GDPR).
UR - http://www.scopus.com/inward/record.url?scp=85063349354&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=85063349354&partnerID=8YFLogxK
U2 - 10.1016/j.jpubeco.2019.02.001
DO - 10.1016/j.jpubeco.2019.02.001
M3 - Article
AN - SCOPUS:85063349354
VL - 173
SP - 113
EP - 124
JO - Journal of Public Economics
JF - Journal of Public Economics
SN - 0047-2727
ER -