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Privacy and Innovation


  • Avi Goldfarb
  • Catherine Tucker


Executive SummaryInformation and communication technologies now enable firms to collect detailed and potentially intrusive data about their customers both easily and cheaply. Privacy concerns are thus no longer limited to government surveillance and public figures' private lives. The empirical literature shows that privacy regulation may affect the extent and direction of data-based innovation. We also show that the impacts of privacy regulation can be extremely heterogeneous. We therefore argue that digitization has made privacy policy a part of innovation policy.

Suggested Citation

  • Avi Goldfarb & Catherine Tucker, 2012. "Privacy and Innovation," Innovation Policy and the Economy, University of Chicago Press, vol. 12(1), pages 65-90.
  • Handle: RePEc:ucp:ipolec:doi:10.1086/663156

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    • 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.

    References listed on IDEAS

    1. Avi Goldfarb & Catherine Tucker, 2011. "Online Display Advertising: Targeting and Obtrusiveness," Marketing Science, INFORMS, vol. 30(3), pages 389-404, 05-06.
    2. Catherine Tucker, 2010. "Social Networks, Personalized Advertising, and Privacy Controls," Working Papers 10-07, NET Institute.
    3. Randall Lewis & Justin M. Rao & David H. Reiley, 2015. "Measuring the Effects of Advertising: The Digital Frontier," NBER Chapters,in: Economic Analysis of the Digital Economy, pages 191-218 National Bureau of Economic Research, Inc.
    4. Avi Goldfarb & Catherine E. Tucker, 2011. "Privacy Regulation and Online Advertising," Management Science, INFORMS, vol. 57(1), pages 57-71, January.
    5. Amalia R. Miller & Catherine E. Tucker, 2011. "Encryption and the loss of patient data," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 30(3), pages 534-556, June.
    6. Alessandro Acquisti & Hal R. Varian, 2005. "Conditioning Prices on Purchase History," Marketing Science, INFORMS, vol. 24(3), pages 367-381, May.
    7. 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.
    8. David S. Evans, 2009. "The Online Advertising Industry: Economics, Evolution, and Privacy," Journal of Economic Perspectives, American Economic Association, vol. 23(3), pages 37-60, Summer.
    9. Agha, Leila, 2014. "The effects of health information technology on the costs and quality of medical care," Journal of Health Economics, Elsevier, vol. 34(C), pages 19-30.
    10. Benjamin Hermalin & Michael Katz, 2006. "Privacy, property rights and efficiency: The economics of privacy as secrecy," Quantitative Marketing and Economics (QME), Springer, vol. 4(3), pages 209-239, September.
    11. James Campbell & Avi Goldfarb & Catherine Tucker, 2015. "Privacy Regulation and Market Structure," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 24(1), pages 47-73, March.
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    Cited by:

    1. Yi Qian & Hui Xie, 2013. "Drive More Effective Data-Based Innovations: Enhancing the Utility of Secure Databases," NBER Working Papers 19586, National Bureau of Economic Research, Inc.
    2. Avi Goldfarb, 2014. "What is Different About Online Advertising?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 44(2), pages 115-129, March.
    3. Taylor, Curtis & Wagman, Liad, 2014. "Consumer privacy in oligopolistic markets: Winners, losers, and welfare," International Journal of Industrial Organization, Elsevier, vol. 34(C), pages 80-84.
    4. Anja Lambrecht & Avi Goldfarb & Alessandro Bonatti & Anindya Ghose & Daniel Goldstein & Randall Lewis & Anita Rao & Navdeep Sahni & Song Yao, 2014. "How do firms make money selling digital goods online?," Marketing Letters, Springer, vol. 25(3), pages 331-341, September.

    More about this item

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy


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