Privacy Regulation and Quality-Enhancing Innovation

Yassine Lefouili, Leonardo Madio and Ying Lei Toh

No 10545, CESifo Working Paper Series from CESifo

Abstract: We analyze how a privacy regulation taking the form of a cap on information disclosure affects quality-enhancing innovation incentives by a monopolist—who derives revenues solely from disclosing user data to third parties—and consumer surplus. If the share of privacy-concerned users is sufficiently small, privacy regulation has a negative effect on innovation and may harm users. However, if the share of privacy-concerned users is sufficiently large, privacy regulation has a positive effect on innovation. In this case, there is no trade-off between privacy and innovation and users always benefit from privacy regulation.

Keywords: privacy regulation; data disclosure; innovation (search for similar items in EconPapers)
JEL-codes: D83 L15 L51 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-law, nep-mic and nep-reg
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https://www.cesifo.org/DocDL/cesifo1_wp10545.pdf (application/pdf)

Related works:
Journal Article: Privacy Regulation and Quality‐Enhancing Innovation (2024)
Working Paper: Privacy regulation and quality-enhancing innovation (2024)
Working Paper: Privacy Regulation and Quality-Enhancing Innovation (2023)
Working Paper: Privacy Regulation and Quality-Enhancing Innovation (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_10545

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