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International protection of consumer data

Yongmin Chen, Xinyu Hua and Keith Maskus

Journal of International Economics, 2021, vol. 132, issue C

Abstract: We study the international protection of consumer data in a model where data from product sales generate additional revenue to firms but disutility to consumers. When data usage lacks transparency, a firm suffers a commitment problem and overuses consumer data. Greater transparency enables the firm to commit to less data usage, which boosts consumer demand and leads to a higher price but also higher output if the firm operates only in one country. A multinational firm faces more challenges when balancing the trade-offs in data usage across countries that differ in consumer preferences for privacy. Contrary to the result for a single country, more transparency can exacerbate data-usage and output distortions in the global economy, and unilateral data regulation by a country may reduce global welfare. There can be substantial gains from international coordination—though not necessarily uniformity—of data regulations.

Keywords: Consumer data; Privacy; Multinational firm; Regulation; Data localization; International coordination (search for similar items in EconPapers)
JEL-codes: D18 F23 L15 (search for similar items in EconPapers)
Date: 2021
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Working Paper: International Protection of Consumer Data (2020) Downloads
Working Paper: International Protection of Consumer Data (2020) Downloads
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DOI: 10.1016/j.jinteco.2021.103517

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