Regulating data privacy and cybersecurity

Wing Man Wynne Lam, Jacob Seifert

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Abstract

This paper studies firms' data privacy and cybersecurity choices. We emphasise the strategic interdependence between these decisions and demonstrate that security in both the market equilibrium and the social optimum tends to be higher when data is shared. We also identify important market failures in the sense that firms tend to under-invest in security and over-share data. Our welfare analysis of a minimum security standard, disclosure and consumer education policies, liability rules and consumer mitigation strategies highlights the need for a co-ordinated approach to regulation.
Original languageEnglish
Pages (from-to)143-175
Number of pages33
JournalJournal of Industrial Economics
Volume71
Issue number1
Early online date6 Apr 2023
DOIs
Publication statusPublished - 13 Apr 2023

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