Handbook of Media Economics, vol 1B

indeed privacy regulation necessarily comes at the expense of allocative efficiency. What

is striking about their paper is that, perhaps because it predates the advent of the current

controversy about targeted advertising, their model is evocative of a labor market where

there is potential information out there to inform employers about the employees’ poten-

tial quality. Their paper finds that privacy can be efficient even when there is no taste for

privacy present. They also explore the related argument that privacy regulation is not

needed if property rights can be convincingly established for data. Their model suggests

that an effective privacy policy may need to ban information transmission or use, rather

than simply assigning individuals’