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Digital Privacy

Author

Listed:
  • Itay Perah Fainmesser
  • Andrea Galeotti

    (University of Essex)

  • Ruslan Momot

    (HEC Paris - Ecole des Hautes Etudes Commerciales)

Abstract

We study the incentives of a digital business to collect and protect users' information. The information the business collects improves the service it provides to consumers, but it may also be accessed, at a cost, by third strategic parties in a way that harms users, imposing privacy costs. We characterize how the revenue model of the business shapes the equilibrium data policy. We compare the equilibrium data policy with the social optimum and show that a two-pronged policy, which combines a minimal data protection requirement with a tax proportional to the amount of data collected, restores efficiency.

Suggested Citation

  • Itay Perah Fainmesser & Andrea Galeotti & Ruslan Momot, 2020. "Digital Privacy," Working Papers hal-02896509, HAL.
    • Handle: RePEc:hal:wpaper:hal-02896509
    DOI: 10.2139/ssrn.3459274
    as

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    Citations

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    Cited by:

    1. Dirk Bergemann & Alessandro Bonatti & Tan Gan, 2022. "The economics of social data," RAND Journal of Economics, RAND Corporation, vol. 53(2), pages 263-296, June.
    2. Yosuke Uno & Akira Sonoda & Masaki Bessho, 2021. "The Economics of Privacy: A Primer Especially for Policymakers," Bank of Japan Working Paper Series 21-E-11, Bank of Japan.
    3. Cong, Lin William & Wei, Wenshi & Xie, Danxia & Zhang, Longtian, 2022. "Endogenous growth under multiple uses of data," Journal of Economic Dynamics and Control, Elsevier, vol. 141(C).
    4. Bergemann, Dirk & Ottaviani, Marco, 2021. "Information Markets and Nonmarkets," CEPR Discussion Papers 16459, C.E.P.R. Discussion Papers.

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