35 th Annual Conference - European Association of Law and Economics THE LAW AND ECONOMICS OF REUSING INFORMATION GABRIEL DOMÉNECH-PASCUAL Professor of Law at the University of Valencia Abstract: Acquiring and using information often produces externalities, which arguably justifies a number of legal rules aimed at correcting such external effects and inducing individuals to conduct those activities in a socially appropriate manner. The present paper analyzes whether information may be repurposed, i.e. whether information that was collected and used for some purpose and under certain legal conditions may be reused for a different purpose. This problem arises in countless instances and different legal areas, such as data protection and procedural law. The paper formally shows that allowing such reutilization can distort the incentives individuals have when processing information and, in particular, negatively affect the choice of the order in which they acquire and use it for different purposes, or lead them to produce either less or more information than socially optimal. Keywords: privacy, data protection, antitrust, asymmetric information, procedural law, litigation, parallel proceedings. JEL Classification: K41, K21, D80. I. INTRODUCTION The present paper analyzes whether the information that has been collected and used for some purpose and under certain legal conditions may be used for a different purpose. This problem is pretty ubiquitous. It arises in countless instances and different legal areas, such as data protection, antitrust law, tax law, criminal and procedural law, etc. It is, moreover, of increasing relevance, as it is arguably the case that the –private– benefits of reusing information are becoming larger, whereas the costs are decreasing. At first sight, one might intuitively think that such reutilization should, in principle, be allowed. Information is valuable, as it allows people to increase the expected pay-offs of their decisions, but also costly. Operations aimed at acquiring it usually entail substantial costs. By reusing it, one can derive those benefits from the information one already has without the need to incur the costs of gathering it. Yet intuition can be deceptive. It must be noted that acquisition and utilization of information is heavily regulated, as these activities usually create substantial externalities. Indeed, sometimes individuals produce a positive effect on third parties when collecting or using information, so that the former do not have enough incentives to perform those activities as it would be socially optimal. In other instances, by contrast, individuals do not fully internalize the costs of processing information, which causes the level of that activity to be higher than socially desirable. These positive and negative externalities might well make regulation necessary. Data protection law is an example. “Processing” –i.e. search, collection, recording, organization, structuring, storage, adaptation, alteration, retrieval, consultation, disclosure, dissemination, alignment, combination, restriction, erasure, destruction, etc.– of personal data is heavily regulated in western legal systems, mainly because of the negative effects such operations impose on the individuals whose data are processed.