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GDPR and the Lost Generation of Innovative Apps

Author

Listed:
  • Rebecca Janßen
  • Reinhold Kesler
  • Michael E. Kummer
  • Joel Waldfogel

Abstract

Using data on 4.1 million apps at the Google Play Store from 2016 to 2019, we document that GDPR induced the exit of about a third of available apps; and in the quarters following implementation, entry of new apps fell by half. We estimate a structural model of demand and entry in the app market. Comparing long-run equilibria with and without GDPR, we find that GDPR reduces consumer surplus and aggregate app usage by about a third. Whatever the privacy benefits of GDPR, they come at substantial costs in foregone innovation.

Suggested Citation

  • Rebecca Janßen & Reinhold Kesler & Michael E. Kummer & Joel Waldfogel, 2022. "GDPR and the Lost Generation of Innovative Apps," NBER Working Papers 30028, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:30028
    Note: IO
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    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
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media

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