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Nonrivalry and the Economics of Data

Author

Listed:
  • Charles Jones

    (Stanford University)

  • Christopher Tonetti

    (Stanford GSB)

Abstract

Data is a nonrival good: a person's location history, genome sequence, or driving data can be used by any number of firms without being diminished. Romer (1990) showed that the nonrivalry of ideas has first-order economic implications. While data and ideas are different in important ways, the nonrivalry of data similarly has implications for economic growth and welfare. Do markets produce the right amount of data? Who should own data? We show that individual firms, fearful of creative destruction, may choose in equilibrium to hoard any data they own. Yet there may be large social gains to sharing data. For example, the allocation in which consumers own their data and sell it to many firms leads the economy to operate with a higher degree of increasing returns to scale. Even in a semi-endogenous growth model in which long-run growth is invariant to standard policies, data sharing can lead to faster economic growth.

Suggested Citation

  • Charles Jones & Christopher Tonetti, 2018. "Nonrivalry and the Economics of Data," 2018 Meeting Papers 477, Society for Economic Dynamics.
    • Handle: RePEc:red:sed018:477
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    JEL classification:

    • C80 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - General
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • K11 - Law and Economics - - Basic Areas of Law - - - Property Law
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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