The Bright Side of the GDPR: Welfare-Improving Privacy Management

Arbeitspapier

We study the GDPR's opt-in requirement in a model with a firm that provides a digital service and consumers who are heterogeneous in their valuations of the firm's service as well as the privacy costs incurred when sharing personal data with the firm. We show that the GDPR boosts demand for the service by allowing consumers with high privacy costs to buy the service without sharing data. The increased demand leads to a higher price but a smaller quantity of shared data. If the firm's revenue is largely usage-based rather than data-based, then both the firm's profit and consumer surplus increase after the GDPR, implying that the GDPR can be welfare-improving. But if the firm's revenue is largely from data monetization, then the GDPR can reduce the firm's profit and consumer surplus.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 10617

Classification and Topics

• Classification: Wirtschaft ; Consumer Protection ; Allocative Efficiency; Cost-Benefit Analysis ; Cyber Law ; Monopoly; Monopolization Strategies ; Economics of Regulation ; Information and Internet Services; Computer Software
• Subject: GDPR ; opt-in ; opt-out ; privacy management ; welfare

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Choe, Chongwoo ; Matsushima, Noriaki ; Shekhar, Shiva
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2023

Further information

• Handle: http://hdl.handle.net/10419/279368
• Last update: 10.03.2025, 11:41 AM CET