The Market for Data Privacy
55 Pages Posted: 23 Mar 2019 Last revised: 29 Mar 2021
Date Written: March 29, 2020
We scrape a comprehensive set of US firms’ privacy policies, and study them alongside firms' web data extraction behaviour. We find considerable and systematic variation in privacy policies along multiple dimensions including ease of access, length, readability, and clarity, both within and between industries. Surprisingly, firms' data extraction is strongly and positively related to the length and complexity of their privacy policies. Firms with intermediate levels of technical sophistication have longer, more complex policies. A simple signalling model of firms engaging in data extraction in an economy with both myopic and sophisticated consumers helps to rationalize these findings.
Keywords: privacy, data markets, web tracking, third-party sharing
JEL Classification: D8, K2, L1
Suggested Citation: Suggested Citation