Towards an Optimal Regulatory Strategy for Data Protection: Insights from Law and Economics

Abstract

In this paper, we examine data protection regulation from the standpoint of Law & Economics. Specifically, we analyze the advantages and disadvantages of the two distinct data protection regulation frameworks in the EU and the US. We compare these regulatory frameworks based on the criteria set by S. Shavell in his seminal work “Liability for Harm Versus Regulation of Safety”. We utilize Shavell’s model to compare the ex ante regulatory approach to data protection in the EU with the ex post liability approach of the US. This comparative analysis helps us explore whether the focus in the field of data protection should be on proactive (ex-ante) regulation or reactive (ex-post) liability. We find difficulties in comparing the regulatory frameworks, considering the dominant conceptual framework of human rights in the data protection field. However, the comparison provides valuable efficiency-based arguments on ways to optimize both regulatory frameworks.