The perils of privacy regulation

Abstract

Advocates of digital privacy law believe it is necessary to correct failures in the market for digital privacy. Though legislators allegedly craft digital privacy regulation to protect consumers, some advocates have understated the dangers that digital privacy law may engender. This paper provides evidence for Kirzner’s “perils of regulation” in the digital privacy arena. The regulatory process fails to simulate the market process, stifles entrepreneurial discovery, and creates opportunities for superfluous discovery. My research suggests that policy-makers should consider a more holistic accounting of the costs before imposing additional digital privacy regulation.