A Welfare Analysis of Secondary Use of Personal Data

Personal information on individuals is increasingly shared between companies that do not belong to the same industry. Such exchange may occur for purposes of risk assessment, identity veri…cation or cross-marketing. Secondary purposes of data use are regulated under the European Data Protection Directive, but implementation in Europe di¤ers from one country to another. At the EU level, there is currently a controversial discussion whether such sharing is bene…tial from a consumer’s perspective. In this paper, I discuss the impact of data protection regimes on …rms’capabilities of information sharing and price discrimination. Data protection regimes induce rent-shifting among …rms and consumers and it can be shown that given data protection rules not all consumers bene…t equally from compensation for information disclosure. JEL-Classi…cation: D43; L14; O30.