International Protection of Consumer Data

Yongmin Chen, Xiny Hua () and Keith Maskus

No 8391, CESifo Working Paper Series from CESifo

Abstract: We study the international protection of consumer data in a model where data usage benefits firms at the expense of their customers. We show that a multinational firm does not balance this trade-off efficiently if its data usage lacks (full) transparency or if consumers’ privacy preference differs across countries. Unilateral data regulation by each country addresses the moral-hazard problem associated with opacity, but may nevertheless reduce global welfare due to cross-country externalities that distort output and data usage. The regulations may also cause excessive investment in data localization, even though localization mitigates the externalities. Our findings highlight the need for international coordination. though not necessarily uniformity. on regulations about data usage and protection.

Keywords: consumer data; data usage; privacy; multinational firm; regulation; data localization; international coordination (search for similar items in EconPapers)
JEL-codes: F12 L15 L86 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-mic and nep-pay
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Related works:
Journal Article: International protection of consumer data (2021)
Working Paper: International Protection of Consumer Data (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_8391

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