Privacy Costs and Consumer Data Acquisition: An Economic Analysis of Data Privacy Regulation

Zhijun Chen ()
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Zhijun Chen: Monash University, Department of Economics

No 2022-07, Monash Economics Working Papers from Monash University, Department of Economics

Abstract: General Data Protection Regulation (GDPR) aims to protect consumer data privacy, however, its adverse effects have been widely documented. We present a new model for the analysis of consumer data acquisition under privacy regulation. We treat both data and analytics as separate strategic variables and consider the heterogeneity of privacy costs across consumers. Using this model to examine the impact of GDPR, we identify a market failure before GDPR and find that GDPR activates a market for data acquisition by imposing consent requirements on data acquisition. We further study the optimal design of the mechanism for consumer data acquisition and deliver important policy implications for implementing the social optimum.

Keywords: Data acquisition; Privacy Costs; and Data Analytics (search for similar items in EconPapers)
JEL-codes: D47 K21 L11 L40 (search for similar items in EconPapers)
Date: 2022-04
New Economics Papers: this item is included in nep-big, nep-law and nep-reg
References: View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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