Privacy Protection and Technology Diffusion: The Case of Electronic Medical Records
AbstractSome policymakers argue that consumers need legal protection of their privacy before they adopt interactive technologies. Others contend that privacy regulations impose costs that deter adoption. We contribute to this growing debate by quantifying the effect of state privacy regulation on the diffusion of Electronic Medical Record technology (EMR). EMR allows medical providers to store and exchange patient information using computers rather than paper records. Hospitals may not adopt EMR if patients feel their privacy is not safeguarded by regulation. Alternatively, privacy protection may inhibit adoption if hospitals cannot benefit from exchanging patient information with one another. In the US, medical privacy laws that restrict the ability of hospitals to disclose patient information vary across time and across states. We exploit this variation to explore how privacy laws affect whether hospitals adopt EMR. Our results suggest that inhibition of EMR's network benefits reduces hospital adoption by up to 25 percent. We find similar evidence when we control for the endogeneity of state laws using variation in signups to the Do Not Call list.
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Bibliographic InfoPaper provided by NET Institute in its series Working Papers with number 07-16.
Length: 39 pages
Date of creation: Sep 2007
Date of revision: Sep 2007
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Web page: http://www.NETinst.org/
Technology adoption; privacy laws; network effects; hospitals;
Other versions of this item:
- Amalia R. Miller & Catherine Tucker, 2009. "Privacy Protection and Technology Diffusion: The Case of Electronic Medical Records," Management Science, INFORMS, vol. 55(7), pages 1077-1093, July.
- I1 - Health, Education, and Welfare - - Health
- K2 - Law and Economics - - Regulation and Business Law
- L5 - Industrial Organization - - Regulation and Industrial Policy
- O3 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-11-10 (All new papers)
- NEP-ICT-2007-11-10 (Information & Communication Technologies)
- NEP-INO-2007-11-10 (Innovation)
- NEP-IPR-2007-11-10 (Intellectual Property Rights)
- NEP-LAW-2007-11-10 (Law & Economics)
- NEP-NET-2007-11-10 (Network Economics)
- NEP-REG-2007-11-10 (Regulation)
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"Privacy and Innovation,"
Innovation Policy and the Economy,
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