Endogenous growth under multiple uses of data

We model a dynamic data economy with fully endogenous growth where agents generate from consumption and share them innovation production firms. Different other productive factors such as labor or capital, are nonrival not only among firms but also in their uses across sectors, which affect both the level of economic outputs. Despite vertical nonrivalry, sector dominates usage contribution to because (i) innovations cumulative benefit that durable dynamically nonrival; (ii) “desensitize” raw into knowledge when entering production, allays consumers’ privacy concerns. Data sectors interact generating allocative distortions an apparent substitutability due labor’s rival complementarity data. Consequently, rates diverge under social planner decentralized equilibrium, is novel literature has policy implications. Specifically, failure internalize spillover while bearing costs, combined firms’ market power, leads underpricing inefficient supply, causing underemployment suboptimal long-run growth. Improving efficiency ineffective mitigating underutilization data, interventions direct subsidies hold promises.