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Privacy Protection and Technology Diffusion: The Case of Electronic Medical Records

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Abstract

Some 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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File URL: http://www.NETinst.org/Miller-Tucker_07-16.pdf
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Bibliographic Info

Paper provided by NET Institute in its series Working Papers with number 07-16.

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Length: 39 pages
Date of creation: Sep 2007
Date of revision: Sep 2007
Handle: RePEc:net:wpaper:0716

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Keywords: Technology adoption; privacy laws; network effects; hospitals;

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Cited by:
  1. 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, 2011. "Privacy and Innovation," NBER Chapters, in: Innovation Policy and the Economy, Volume 12, pages 65-89 National Bureau of Economic Research, Inc.
  2. Brant Callaway & Vivek Ghosal, 2012. "Adoption and Diffusion of Health Information Technology - The Case of Primary Care Clinics," CESifo Working Paper Series 3925, CESifo Group Munich.
  3. Tatiana Komarova & Denis Nekipelov & Evgeny Yakovlev, 2011. "Identification, data combination and the risk of disclosure," CeMMAP working papers CWP38/11, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  4. Gregory B. Cline & John M. Luiz, 2011. "The Economics of Information Technology in Public Sector Health Facilities in Developing Countries: The Case of South Africa," Working Papers 251, Economic Research Southern Africa.
  5. Arora, Ashish & Forman, Chris & Nandkumar, Anand & Telang, Rahul, 2010. "Competition and patching of security vulnerabilities: An empirical analysis," Information Economics and Policy, Elsevier, vol. 22(2), pages 164-177, May.

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