Nonrivalry and the Economics of Data
Charles Jones and
Christopher Tonetti
No 26260, NBER Working Papers from National Bureau of Economic Research, Inc
Abstract:
Data is nonrival: a person’s location history, medical records, and driving data can be used by any number of firms simultaneously. Nonrivalry leads to increasing returns and implies an important role for market structure and property rights. Who should own data? What restrictions should apply to the use of data? We show that in equilibrium, firms may not adequately respect the privacy of consumers. But nonrivalry leads to other consequences that are less obvious. Because of nonrivalry, there may be large social gains to data being used broadly across firms, even in the presence of privacy considerations. Fearing creative destruction, firms may choose to hoard data they own, leading to the inefficient use of nonrival data. Instead, giving the data property rights to consumers can generate allocations that are close to optimal. Consumers balance their concerns for privacy against the economic gains that come from selling data to all interested parties.
JEL-codes: E0 O4 (search for similar items in EconPapers)
Date: 2019-09
New Economics Papers: this item is included in nep-com, nep-mac and nep-mic
Note: EFG PR
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Citations: View citations in EconPapers (9)
Published as Charles I. Jones & Christopher Tonetti, 2020. "Nonrivalry and the Economics of Data," American Economic Review, American Economic Association, vol. 110(9), pages 2819-2858, September.
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Journal Article: Nonrivalry and the Economics of Data (2020)
Working Paper: Nonrivalry and the Economics of Data (2018)
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