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The Economics of Privacy

Author

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  • Kai-Lung Hui

    (National University of Singapore)

  • I.P.L. Png

    (National University of Singapore)

Abstract

This chapter reviews economic analyses of privacy. We begin by scrutinizing the “free market” critique of privacy regulation. Welfare may be non-monotone in the quantity of information, hence there may be excessive incentive to collect information. This result applies to both non-productive and productive information. Over-investment is exacerbated to the extent that personal information is exploited across markets. Further, the “free market” critique does not apply to overt and covert collection of information that directly causes harm. We then review research on property rights and challenges in determining their optimal allocation. We conclude with insights from recent empirical research and directions for future research.

Suggested Citation

  • Kai-Lung Hui & I.P.L. Png, 2005. "The Economics of Privacy," Industrial Organization 0505007, University Library of Munich, Germany, revised 29 Aug 2005.
    • Handle: RePEc:wpa:wuwpio:0505007
    Note: Type of Document - pdf; pages: 54
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    References listed on IDEAS

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    Cited by:

    1. Caleb S. Fuller, 2018. "Privacy law as price control," European Journal of Law and Economics, Springer, vol. 45(2), pages 225-250, April.
    2. Simon P. Anderson & André De Palma, 2009. "Information congestion," RAND Journal of Economics, RAND Corporation, vol. 40(4), pages 688-709, December.
    3. Jean-Marc Zogheib & Marc Bourreau, 2021. "Privacy, Competition, and Multi-Homing," EconomiX Working Papers 2021-15, University of Paris Nanterre, EconomiX.
    4. Lagerlöf, Johan N.M., 2023. "Surfing incognito: Welfare effects of anonymous shopping," International Journal of Industrial Organization, Elsevier, vol. 87(C).
    5. 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.
    6. Morlok, Tina & Matt, Christian & Hess, Thomas, 2017. "Privatheitsforschung in den Wirtschaftswissenschaften: Entwicklung, Stand und Perspektiven," Working Papers 1/2017, University of Munich, Munich School of Management, Institute for Information Systems and New Media.
    7. Alessandro Acquisti & Curtis Taylor & Liad Wagman, 2016. "The Economics of Privacy," Journal of Economic Literature, American Economic Association, vol. 54(2), pages 442-492, June.
    8. Yoan Hermstrüwer & Stephan Dickert, 2013. "Tearing the Veil of Privacy Law: An Experiment on Chilling Effects and the Right to Be Forgotten," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2013_15, Max Planck Institute for Research on Collective Goods.
    9. Aidan Hollis & Jason Strauss, "undated". "Privacy, Driving Data and Automobile Insurance: An Economic Analysis," Working Papers 2008-13, Department of Economics, University of Calgary, revised 14 Feb 2008.
    10. Caleb S. Fuller, 2019. "Is the market for digital privacy a failure?," Public Choice, Springer, vol. 180(3), pages 353-381, September.
    11. Avi Goldfarb & Catherine Tucker, 2012. "Shifts in Privacy Concerns," American Economic Review, American Economic Association, vol. 102(3), pages 349-353, May.

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