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Privacy, property rights and efficiency: The economics of privacy as secrecy

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  • Benjamin Hermalin

    ()

  • Michael Katz

    ()

Abstract

There is a long history of governmental efforts to protect personal privacy and strong debates about the merits of such policies. A central element of privacy is the ability to control the dissemination of personally identifiable data to private parties. Posner, Stigler, and others have argued that privacy comes at the expense of allocative efficiency. Others have argued that privacy issues are readily resolved by proper allocation of property rights to control information. Our principal findings challenge both views. We find: (a) privacy can be efficient even when there is no “taste” for privacy per se, and (b) to be effective, a privacy policy may need to ban information transmission or use rather than simply assign individuals control rights to their personally identifiable data. Copyright Springer Science + Business Media, LLC 2006

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File URL: http://hdl.handle.net/10.1007/s11129-005-9004-7
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Bibliographic Info

Article provided by Springer in its journal Quantitative Marketing and Economics.

Volume (Year): 4 (2006)
Issue (Month): 3 (September)
Pages: 209-239

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Handle: RePEc:kap:qmktec:v:4:y:2006:i:3:p:209-239

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Web page: http://www.springerlink.com/link.asp?id=111240

Related research

Keywords: Privacy; Property rights; Personal data; Asymmetric information;

References

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  1. Posner, Richard A, 1981. "The Economics of Privacy," American Economic Review, American Economic Association, vol. 71(2), pages 405-09, May.
  2. Katz, Michael L, 1983. "Non-Uniform Pricing, Output and Welfare under Monopoly," Review of Economic Studies, Wiley Blackwell, vol. 50(1), pages 37-56, January.
  3. Giacomo Calzolari & Alessandro Pavan, 2004. "On the Optimality of Privacy in Sequential Contracting," Discussion Papers 1394, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  4. Alessandro Acquisti & Hal R. Varian, 2005. "Conditioning Prices on Purchase History," Marketing Science, INFORMS, vol. 24(3), pages 367-381, May.
  5. Charles Kahn & James McAndrews & William Roberds, 2001. "A Theory of Transactions Privacy," Center for Financial Institutions Working Papers 01-12, Wharton School Center for Financial Institutions, University of Pennsylvania.
  6. Taylor, Curt, 2004. "Privacy and Information Acquisition in Competitive Markets," Berkeley Olin Program in Law & Economics, Working Paper Series qt5hk0k89w, Berkeley Olin Program in Law & Economics.
  7. Varian, Hal R., 1989. "Price discrimination," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 10, pages 597-654 Elsevier.
  8. George J. Stigler, 1980. "An Introduction to Privacy in Economics and Politics," University of Chicago - George G. Stigler Center for Study of Economy and State 10, Chicago - Center for Study of Economy and State.
  9. Levin, Jonathan, 2001. "Information and the Market for Lemons," RAND Journal of Economics, The RAND Corporation, vol. 32(4), pages 657-66, Winter.
  10. Grossman, Sanford J, 1981. "The Informational Role of Warranties and Private Disclosure about Product Quality," Journal of Law and Economics, University of Chicago Press, vol. 24(3), pages 461-83, December.
  11. Hirshleifer, Jack, 1971. "The Private and Social Value of Information and the Reward to Inventive Activity," American Economic Review, American Economic Association, vol. 61(4), pages 561-74, September.
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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Contradictions in privacy
    by Chris Sampson in Chris Sampson on 2013-10-23 05:30:22
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Cited by:
  1. Simeon Schudy & Verena Utikal, 2012. "The Influence of (Im)perfect Data Privacy on the Acquisition of Personal Health Data," TWI Research Paper Series 76, Thurgauer Wirtschaftsinstitut, Universität Konstanz.
  2. Tucker, Catherine E., 2012. "The economics of advertising and privacy," International Journal of Industrial Organization, Elsevier, vol. 30(3), pages 326-329.
  3. Michele Braun & James McAndrews & William Roberds & Richard Sullivan, 2008. "Understanding risk management in emerging retail payments," Economic Policy Review, Federal Reserve Bank of New York, issue Sep, pages 137-159.
  4. Beresford, Alastair R. & Kübler, Dorothea & Preibusch, Sören, 2010. "Unwillingness to pay for privacy: A field experiment," Discussion Papers, Research Unit: Market Behavior SP II 2010-03, Social Science Research Center Berlin (WZB).
  5. Avi Goldfarb & Catherine Tucker, 2012. "Privacy and Innovation," Innovation Policy and the Economy, University of Chicago Press, vol. 12(1), pages 65 - 90.
    • Avi Goldfarb & Catherine Tucker, 2012. "Privacy and Innovation," NBER Chapters, in: Innovation Policy and the Economy, Volume 12, pages 65-89 National Bureau of Economic Research, Inc.
  6. Katz, Michael L., 2013. "Provider competition and healthcare quality: More bang for the buck?," International Journal of Industrial Organization, Elsevier, vol. 31(5), pages 612-625.
  7. ROCHELANDET, Fabrice & TAI, Silvio H.T., 2012. "Do privacy laws affect the location decisions of internet firms? evidence for privacy havens," MPRA Paper 37354, University Library of Munich, Germany.
  8. Kai-Lung Hui & I.P.L. Png, 2005. "The Economics of Privacy," Industrial Organization 0505007, EconWPA, revised 29 Aug 2005.
  9. Luc Wathieu & Allan Friedman, 2009. "An empirical approach to understanding privacy concerns," ESMT Research Working Papers ESMT-09-001, ESMT European School of Management and Technology, revised 14 Jan 2009.

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