Nonrivalry and the Economics of Data

Nonrivalry and the Economics of Data

Data is nonrival: a person’s location history, medical records, and driving data can be used by many firms simultaneously. Nonrivalry leads to increasing returns. As a result, there may be social gains to data being used broadly across firms, even in the presence of privacy considerations. Fearing c...

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Bibliographic Details
Published in:The American economic review Vol. 110; no. 9; pp. 2819 - 2858
Main Authors: Jones, Charles I., Tonetti, Christopher
Format: Journal Article
Language:English
Published: American Economic Association 01-09-2020
Subjects:
Analysis
Collective consumption
Economic aspects
Management
Marketing
Personal information
Privacy, Right of
United States
Online Access:Get full text
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Summary:Data is nonrival: a person’s location history, medical records, and driving data can be used by many firms simultaneously. Nonrivalry leads to increasing returns. As a result, there may be social gains to data being used broadly across firms, even in the presence of privacy considerations. Fearing creative destruction, firms may choose to hoard their data, leading to the inefficient use of nonrival data. Giving data property rights to consumers can generate allocations that are close to optimal. Consumers balance their concerns for privacy against the economic gains that come from selling data broadly.
ISSN:0002-8282
1944-7981
DOI:10.1257/aer.20191330