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Privacy and Markets: A Love Story

49 Pages Posted: 7 Aug 2015 Last revised: 15 Jan 2016

Ryan Calo

University of Washington - School of Law; Stanford University - Law School; Yale Law School

Date Written: August 6, 2015

Abstract

Law and economics tends to be skeptical of privacy, finding privacy overrated, inefficient, and perhaps even immoral. Law should not protect privacy because privacy inhibits the market by allowing people to hide useful information.

Privacy law scholars tend to be skeptical of markets. Markets “unravel” privacy by penalizing consumers who prefer it, degrade privacy by treating it as just another commodity to be traded, and otherwise interfere with the values or processes that privacy exists to preserve.

This mutual and longstanding hostility obscures the significant degree to which privacy and markets assume and rely upon one another in order to achieve their respective ends.

For example, in a world without privacy, traditional market criteria such as price and quality can be overwhelmed by salient but extraneous information such as the political or social views of market participants. Meanwhile, imagine how much a government must know about its citizens to reject markets and distribute resources according to the maxim “from each according to his ability, to each according to his need.”

Conceiving of privacy and markets as sympathetic helps justify or explain certain legal puzzles, such as why the Federal Trade Commission — an agency devoted to free and open markets and replete with economists — has emerged as the de facto privacy authority in the United States. The account also helps build a normative case for political and other laws that enforce a separation between market and other information.

Keywords: law and economics, privacy, markets

JEL Classification: D4, K00

Suggested Citation

Calo, Ryan, Privacy and Markets: A Love Story (August 6, 2015). Notre Dame Law Review, Forthcoming; University of Washington School of Law Research Paper No. 2015-26. Available at SSRN: https://ssrn.com/abstract=2640607 or http://dx.doi.org/10.2139/ssrn.2640607

Ryan Calo (Contact Author)

University of Washington - School of Law ( email )

William H. Gates Hall
Box 353020
Seattle, WA 98105-3020
United States

Stanford University - Law School ( email )

559 Nathan Abbott Way
Stanford, CA 94305-8610
United States

Yale Law School ( email )

127 Wall Street
New Haven, CT 06511
United States

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