Data ownership, privacy concerns, and consumer welfare

Abstract

We model the relationship between privacy concerns and consumer welfare in data provision under three types of data ownership. Data firms and intermediaries collect and process the data provided by consumers. Consequently, consumer welfare is influenced by the manner in which data are collected and processed. Our findings reveal that a compromised ‘partial data ownership’ regime, wherein consumers retain fundamental personal data rights and keep moderate data privacy concerns, is more favourable for optimising consumer welfare. This suggests that both full data ownership (i.e. consumer data utilisation is hindered by technical barriers and consumers have the control over data) and minimal data ownership (i.e. data are controlled by monopolistic data intermediaries) can result in a decline in consumer welfare, thus restricting the long-term growth of the data economy.