The Economics of Business-to-Government Data Sharing

Abstract

Some private firms collect data which could greatly improve the capacity of governments to take better policy decisions and to increase social welfare. Business-to-Government (B2G) data sharing can result in substantial benefits for society and save costs to governments. The current volume of B2G operations is relatively small and sub-optimal from a social welfare perspective. The EU High Level Expert Group on B2G Data Sharing has explored ways to improve B2G governance conditions and increase the overall number of transactions. To design such measures, it is important to understand the nature of the current barriers for B2G data sharing operations. In this paper, we focus on the more important barriers from an economic perspective: (a) monopolistic data markets, (b) high transaction costs and perceived risks in data sharing and (c) a lack of incentives for private firms to contribute to the production of public benefits. Stronger monetary and reputational incentives for data suppliers could boost the volume of market-based B2G data transactions. Reducing the transaction costs and perceived risks for data supplier, for instance by setting up trusted data intermediary platforms and appropriate contractual provisions, could also be helpful. Another option is mandatory B2G data transfers, with a fair cost compensation. A possible EU governance framework for B2G data sharing operations could cover these options.

Keywords: Economics of Data, Data Access, Business-to-Government Data Sharing, Market Failures, Mandatory Data Access

JEL Classification: L11, L41, L43, L62