A study by the HSE University suggests that strict regulations on personal data collection may negatively impact consumers. Using the Hotelling linear city model, researchers analyzed how data usage affects market efficiency and consumer welfare.
The model indicates that data utilization provides three main benefits: improved product recommendations, better alignment of product features with user preferences, and personalized pricing that allows more consumers to make purchases.
Data from international markets shows that the GDPR has increased costs for tech companies, leading to a 2.1% decline in profits. Furthermore, companies reduced data storage by 26% and data processing by 15% to comply with regulations.
The research suggests that instead of limiting data collection, regulators should focus on preventing illegal data usage and minimizing the risk of leaks to ensure users receive a fair share of the benefits from their information.
