American Economic Journal:
Microeconomics
ISSN 1945-7669 (Print) | ISSN 1945-7685 (Online)
Too Much Data: Prices and Inefficiencies in Data Markets
American Economic Journal: Microeconomics
vol. 14,
no. 4, November 2022
(pp. 218–56)
Abstract
When a user shares her data with online platforms, she reveals information about others. In such a setting, externalities depress the price of data because once a user's information is leaked by others, she has less reason to protect her data and privacy. These depressed prices lead to excessive data sharing. We characterize conditions under which shutting down data markets improves welfare. Platform competition does not redress the problem of excessively low data prices and too much data sharing and may further reduce welfare. We propose a scheme based on mediated data sharing that improves efficiency.Citation
Acemoglu, Daron, Ali Makhdoumi, Azarakhsh Malekian, and Asu Ozdaglar. 2022. "Too Much Data: Prices and Inefficiencies in Data Markets." American Economic Journal: Microeconomics, 14 (4): 218–56. DOI: 10.1257/mic.20200200Additional Materials
JEL Classification
- D62 Externalities
- D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
- H23 Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies
- L51 Economics of Regulation
- L86 Information and Internet Services; Computer Software
- L88 Industry Studies: Services: Government Policy
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