Economic effects of using personal data (personal information)

The rules for collecting, processing and using personal information affect the distribution of surpluses both among firms in markets and between firms and consumers. Regulating the turnover of personal data is fundamental for sellers in the digital economy, including digital platforms. To prevent the risks of privacy violations and manipulation of consumer choice, the legislator restricts the collection and turnover of personal data. At the same time, the use of personal data by digital platforms and their ecosystems can also bring benefits to consumers. Using microeconomic models, the paper analyzes possible economic effects for sellers and buyers arising from the collection, processing and use of information about buyers’ preferences. The models show that collecting and using personal information can increase welfare. The paper proposes an interpretation of the logic of the special legislation and of individual decisions of competition authorities regarding the rules for the use of personal data by digital platforms. It also points to the possibility that restricting the collection of preference data may restrict competition.