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The impact of access to consumer data on the competitive effects of horizontal mergers and exclusive dealing

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  • Jin‐Hyuk Kim
  • Liad Wagman
  • Abraham L. Wickelgren

Abstract

We examine the influence of firms’ ability to employ individualized pricing on the welfare consequences of horizontal mergers. In a two‐to‐one merger, the merger reduces consumer surplus more when firms can price discriminate based on individual preferences compared to when they cannot. However, the opposite holds true in a three‐to‐two merger, in which the reduction in consumer surplus is substantially lower with individualized pricing than with uniform pricing. Further, the merger requires an even smaller marginal cost reduction to justify when an upstream data provider can make exclusive offers for its data to downstream firms. We also show that exclusive contracts for consumer data pose significant antitrust concerns independent of merger considerations. Implications for vertical integration and data mergers are drawn.

Suggested Citation

  • Jin‐Hyuk Kim & Liad Wagman & Abraham L. Wickelgren, 2019. "The impact of access to consumer data on the competitive effects of horizontal mergers and exclusive dealing," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 28(3), pages 373-391, June.
    • Handle: RePEc:bla:jemstr:v:28:y:2019:i:3:p:373-391
    DOI: 10.1111/jems.12285
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    Cited by:

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    6. Jean-Marc Zogheib & Marc Bourreau, 2021. "Privacy, Competition, and Multi-Homing," EconomiX Working Papers 2021-15, University of Paris Nanterre, EconomiX.
    7. Alessandro Acquisti & Curtis Taylor & Liad Wagman, 2016. "The Economics of Privacy," Journal of Economic Literature, American Economic Association, vol. 54(2), pages 442-492, June.
    8. Jin, Ginger Zhe & Wagman, Liad, 2021. "Big data at the crossroads of antitrust and consumer protection," Information Economics and Policy, Elsevier, vol. 54(C).
    9. Flavio Pino, 2022. "The microeconomics of data – a survey," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 49(3), pages 635-665, September.
    10. DELBONO Flavio & REGGIANI Carlo & SANDRINI Luca, 2021. "Strategic data sales to competing firms," JRC Working Papers on Digital Economy 2021-05, Joint Research Centre.
    11. Jean-Marc Zogheib, 2023. "Competition, Privacy, and Multi-Homing," EconomiX Working Papers 2023-34, University of Paris Nanterre, EconomiX.

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