Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/279295 
Year of Publication: 
2023
Series/Report no.: 
CESifo Working Paper No. 10545
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
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.
Subjects: 
privacy regulation
data disclosure
innovation
JEL: 
D83
L15
L51
Document Type: 
Working Paper
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