The rise of large digital platforms – such as Facebook, Google, and Amazon in the U.S.; and JD, Tencent, and Alibaba in China – has led to the unprecedented collection and commercial use of individual data and commensurately unprecedented concentrations of economic value. Seven of the world’s ten largest corporations by market capitalization are digital platforms. The pace of change by this metric has been rapid: only two such firms were among the top ten a decade ago.
Data markets and the institutions active in those markets are currently under intense public discussion and policy debate. Notwithstanding the maturity and ubiquity of these markets, our theoretical understanding and our empirical knowledge of them is limited. This, in turn, may compromise the quality and sophistication of current and future policy that would oversee, regulate, and enable these markets.
The mismatch between our understanding of data markets and the ways in which they actually operate present profound implications for how these markets, when regulated, interact with and affect society. Tools and policies developed based on theories and observation of traditional markets and applied to the unique circumstances of data markets are likely to result in unintended consequences with deleterious impact to consumers and data institutions alike.
Meeting the scale and urgency of this challenge requires collective action among economists to develop the theoretical baseline while preparing and expanding the community of regulatory economists to work on this critical issue.
The Tobin Center is advancing a coordinated effort to accelerate development of new theoretical understanding tailored to these unique markets as well as improved empirical understanding of how they work. Based on the research, we coordinate with policymakers and advocates to inform better, more effective policy .
Our underlying theory of change is that if we (1) improve our theoretical and empirical understanding of data markets, and (2) develop policy concepts based on that understanding, we will materially improve conditions necessary for implementation of a more appropriate and effective data markets policy.