RFID in the retail sector: A methodology for analysis of policy proposals and their implications for privacy, economic efficiency and security

Radio Frequency Identification (RFID), a low cost and potentially covert method of remotely retrieving stored information, is a technology with the potential for substantial social, economic, and legal impacts, including a wide range of individual and social costs and benefits. Broad recent growth of RFID applications, especially in the retail sector, has raised several specific privacy and data protection concerns derived from the potential that RFID offers for surreptitious monitoring, and the linking of personal and obscure or private information into large databases. The result of these concerns has been an active policy debate, with legislative proposals at the US state and federal levels, as well as in Europe. Despite these proposals, a clear and comprehensive analysis of policies, and their implications for security, economic efficiency, and individual privacy and civil liberties, does not yet exist.; This dissertation fills that gap by constructing both a qualitative framework for analyzing policies, and a simple economic model that allows for a quantitative understanding, and assessing several of the leading policy proposals with those two tools. The qualitative framework provides a description of the key stakeholders in the debate, and the issues concerning each. The economic analysis shows that all of the assessed policies involve substantial tradeoffs in firm and individual behaviors and that a true understanding of uncertainties such as market structure and individual preferences about privacy is critical in assessing the impact of any policy. The analysis also shows that policies with costs more evenly distributed across all stakeholder groups result in more information collection. Although additional analysis and more sophisticated planning tools are needed, current policymakers should consider policies that address all stakeholder concerns, and are able to adapt to the inherent uncertainties in markets and individual behaviors.