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A Recipe for Cookies: State Regulation of Consumer Marketing Information


Bruce H. Kobayashi


George Mason University - School of Law

Larry E. Ribstein (Deceased)


University of Illinois College of Law; PERC - Property and Environment Research Center

February 2001

George Mason Law & Economics Research Paper No. 01-04

Abstract:     
The debate over the regulation of consumer marketing information so far has focused on what form any such regulation should take. Despite the lack of consensus on the basic framework for allocating rights to use consumer marketing information, there seems to be broad consensus that any regulation should be promulgated at the federal level. Privacy advocates have stressed uniform federal law as a solution to the potential for under-regulation by the states. Firms have advocated uniform federal law as a solution to the problems of over-regulation by some states and having to comply with multiple and inconsistent state laws.

This paper argues that the focus on a uniform federal solution is misguided. Given the lack of consensus on a basic framework for allocating rights in this area, it would be counterproductive to straightjacket emerging technologies and business practices with a federal law. Rather, consumer marketing information is best regulated at the state rather than the federal level. A process of state experimentation, competition and evolution would allow discovery of appropriate and comprehensive responses to problems concerning consumer marketing information, in contrast to the growing patchwork of federal laws that inhibit the development of such responses.

A state law approach will not lead to over-or under-regulation as some have predicted as long as merchants and consumers can contract for the applicable law and forum. Contractual choice of a jurisdiction that under-regulates privacy is constrained by market forces and by the political forces within that state. Enforcement of contractual choice of law and forum would allow firms and consumers to agree to the application of a particular state's law, thereby eliminating the costs of having to comply with inconsistent or excessively burdensome state laws.

Number of Pages in PDF File: 45

JEL Classification: K40, D18, K12, H11, D72

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Date posted: February 21, 2001  

Suggested Citation

Kobayashi, Bruce H. and Ribstein (Deceased), Larry E., A Recipe for Cookies: State Regulation of Consumer Marketing Information (February 2001). George Mason Law & Economics Research Paper No. 01-04. Available at SSRN: http://ssrn.com/abstract=261073 or http://dx.doi.org/10.2139/ssrn.261073

Contact Information

Bruce H. Kobayashi (Contact Author)
George Mason University - School of Law ( email )
3301 Fairfax Drive
Arlington, VA 22201
United States
703-993-8034 (Phone)
703-993-8088 (Fax)
HOME PAGE: http://mason.gmu.edu/~bkobayas
Larry Edward Ribstein (Deceased)
University of Illinois College of Law ( email )
504 E. Pennsylvania Avenue
Champaign, IL 61820
United States
217-244-9881 (Phone)
217-244-1478 (Fax)
PERC - Property and Environment Research Center
2048 Analysis Drive
Suite A
Bozeman, MT 59718
United States

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