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

Choe, Chongwoo; Matsushima, Noriaki; Shekhar, Shiva

CESifo Working Papers, 2023, 10617

Number of Access:328（2025-07-24 04:30 Counts）

Identifier to cite or link to this item: https://hdl.handle.net/11094/95043

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Title
The Bright Side of the GDPR: Welfare-Improving Privacy Management
Creator
CreatorName
Choe, Chongwoo
NRID
1000080334879 1000080334879
ORCID
0000-0002-7865-3875 0000-0002-7865-3875
researchmap permalink
read0116301 read0116301
Scopus Author ID
7005645778 7005645778
CreatorName
Matsushima, Noriaki
CreatorName
Shekhar, Shiva
Subject
GDPR
opt-in
opt-out
privacy management
welfare
Abstract
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.
Publisher
CESifo
Source Title
CESifo Working Papers
Volume (Issue)
10617
Date of Issued
2023-08-14
Handle URL
https://hdl.handle.net/11094/95043
eISSN
23641428
Relation.isIdenticalTo
URI
https://www.cesifo.org/en/publications/2023/working-paper/bright-side-gdpr-welfare-improving-privacy-management
Access Rights
open access
oaire:version
Version of Record
Category
ディスカッション／ワーキング・ペーパー DP/WP