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The Semicircular Flow of the Data Economy and the Data Sharing Laffer curve

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  • de Pedraza, Pablo
  • Vollbracht, Ian

Abstract

This paper presents a theoretical conceptualization of the data economy that motivates more access to data for scientific research. It defines the semicircular flow of the data economy as analogous to the traditional circular flow of the economy. Knowledge extraction from large, inter-connected data sets displays natural monopoly characteristics, which favours the emergence of oligopolistic data holders that generate and disclose the amount of knowledge that maximizes their profit. If monopoly theory holds, this level of knowledge is below the socially desirable amount because data holders have incentives to maintain their market power. The analogy is further developed to include data leakages, data sharing policies, merit and demerit knowledge, and knowledge injections. It draws a data sharing Laffer curve that defines optimal data sharing as the point where the production of merit knowledge is maximized. The theoretical framework seems to describe many features of the data-intensive economy of today, in which large-scale data holders specialize in extraction of knowledge from the data they hold. Conclusions support the use of policies to enhance data sharing and, or, enhanced user-centric data property rights to facilitate data flows in a manner that would increase merit knowledge generation up to the socially desirable amount.

Suggested Citation

  • de Pedraza, Pablo & Vollbracht, Ian, 2020. "The Semicircular Flow of the Data Economy and the Data Sharing Laffer curve," GLO Discussion Paper Series 515, Global Labor Organization (GLO).
  • Handle: RePEc:zbw:glodps:515
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    References listed on IDEAS

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    More about this item

    Keywords

    Big data; Artificial Intelligence; Government;
    All these keywords.

    JEL classification:

    • H1 - Public Economics - - Structure and Scope of Government
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • P48 - Economic Systems - - Other Economic Systems - - - Political Economy; Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies

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