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Privacy Regulation and Quality‐Enhancing Innovation

Yassine Lefouili, Leonardo Madio and Ying Lei Toh

Journal of Industrial Economics, 2024, vol. 72, issue 2, 662-684

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.

Date: 2024
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https://doi.org/10.1111/joie.12374

Related works:
Working Paper: Privacy regulation and quality-enhancing innovation (2024) Downloads
Working Paper: Privacy Regulation and Quality-Enhancing Innovation (2023) Downloads
Working Paper: Privacy Regulation and Quality-Enhancing Innovation (2023) Downloads
Working Paper: Privacy Regulation and Quality-Enhancing Innovation (2023) Downloads
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Journal of Industrial Economics is currently edited by Pierre Regibeau, Yeon-Koo Che, Kenneth Corts, Thomas Hubbard, Patrick Legros and Frank Verboven

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