SMU Law Review, Vol. 60, pp. 1605-1629, 2007
45 Pages Posted: 16 Dec 2007 Last revised: 2 Sep 2015
This Essay challenges the view that privacy interests are protected primarily by law. Instead, I argue that much of society's privacy is protected implicitly by transaction costs. This renders a significant portion of societal privacy vulnerable when transaction-cost-reducing technologies become widely used.
I first observe that society explicitly uses and implicitly relies upon transaction costs to regulate behavior in different substantive areas. I then explore how this transaction-cost-based regulation operates in the privacy realm. Based upon the understanding that society relies upon non-legal devices such as markets, norms, and structure to regulate human behavior, this Essay calls attention to a class of regulatory devices known as latent structural constraints and provides a positive account of their role in regulating privacy. Structural constraints are physical or technological barriers which regulate conduct; they can be either explicit or latent. An example of an explicit structural constraint is a fence which is designed to prevent entry onto real property, thereby effectively enforcing property rights.
By contrast, latent structural constraints, are the secondary costs arising from the technological state of the world - transaction costs - which implicitly regulate conduct by making certain activities too difficult to engage in on a widespread basis.
Society relies upon these latent structural constraints - or transaction costs - to reliably inhibit certain unwanted conduct in a way that is functionally comparable to its use of law. For example, society has frequently depended upon the search costs involved in aggregating and analyzing large amounts of information to effectively protect anonymity. We might think of some of these inhibited behaviors -- behaviors constrained by transaction costs -- as constituting implicit "structural rights."
The regulatory aspect of latent structural constraints and transaction costs may be non-obvious to policymakers in most instances. This is because it is common to think of transaction costs as manifestations of inefficiency rather than as serving a functional role.
A focus on structural rights -- rights protected solely by the presence of transaction costs -- becomes significant because such rights are vulnerable to sudden dissipation. Emerging technologies tend to lower transaction costs in the areas where they are employed. This lowering of transaction costs may have the unintended side effect of eliminating structural rights that were regulated by the presence of transaction costs. For example, the emergence of search and data aggregation technologies may have had the unintended side effect of permitting privacy intrusions that were previously impossible due to the regulatory role of previously existing transaction costs.
This Essay describes a conceptual framework by which policymakers can explore this association between constrained behavior and latent structural constraints and suggests that they employ this conceptualization in order to identify non-obvious privacy interests which may be threatened by emerging technologies.
Keywords: privacy, regulation, structure, architecture, rights, interests, copyright, intellectual property, RFID, Hohfeld, rules, standards, transaction, transaction costs, Lessig,constraints, records, technology, emerging, latent
JEL Classification: K3
Suggested Citation: Suggested Citation
Surden, Harry, Structural Rights in Privacy. SMU Law Review, Vol. 60, pp. 1605-1629, 2007. Available at SSRN: https://ssrn.com/abstract=1004675