Despite the rapidly growing volume and economic importance of data in the digital economy, the legal framework for data ownership, access and trade has not been clearly defined in the EU or elsewhere. As a background paper to the Commission Communication on "Building a European Data Economy" and the on-going public consultation on that subject, the JRC prepared its report"The economics of ownership, access and trade in digital data".It presents a literature review on data ownership issues, with an emphasis on the economic perspective.
De facto data ownership dominates and often leads to fragmentation or anti-commons problems in data. Data becomes inaccessible because there are so many owners of the rights to it. Combined with limited access and trade, this inhibits the realisation of the full economic benefits of non-rival data (i.e. data that can be reused and continues to exist as a resource). This may slow down innovation and affect the efficiency of data markets.
This new JRC report examines three potential sources of data market failures: externalities related to economies of scope in data, strategic behaviour of data owners and transaction costs in data exchanges. It links the legal debate on data ownership with relevant branches of the economics literature, including intellectual property rights economics, the commons and anti-commons literature, models of trade under the Arrow Information Paradox and multi-sided markets. Economists are inclined to think that well-defined private property rights are a necessary condition for an efficient resource allocation.
The question in this paper is to what extent this view holds for non-rival data. It shows that problems with the definition of data ownership matter, not only for private profit but also for social welfare. The outcomes of bargaining over data ownership and access rights do not necessarily maximize social welfare. Can regulators intervene to improve these outcomes? Would a better specification of legal ownership rights or introducing access provisions improve efficiency and reduce data market failures?
There are no easy answers to these largely empirical questions. There are no policy solutions as yet and more research is required to bring economics up to speed with these questions.
Report: "The economics of ownership, access and trade in digital data"
Commission Communication on "Building a European Data Economy"
Public consultation on 'Building a European Data Economy'
- Publication date
- 21 March 2017