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Selling Strategic Information in Digital Competitive Markets

Author

Listed:
  • David Bounie

    (Télécom ParisTech)

  • Antoine Dubus

    (Télécom ParisTech)

  • Patrick Waelbroeck

    (Ecole Nationale Supérieure des Télécommunications de Bretagne)

Abstract

This article investigates the strategies of a data broker selling information to one or to two competing firms. The data broker combines segments of the consumer demand that allow firms to third-degree price discriminate consumers. We show that the data broker (1) sells information on consumers with the highest willingness to pay; (2) keeps consumers with low willingness to pay unidentified. The data broker strategically chooses to withhold information on consumer demand to soften competition between firms. These results hold under first degree price discrimination, which is a limit case when information is perfect.

Suggested Citation

  • David Bounie & Antoine Dubus & Patrick Waelbroeck, 2020. "Selling Strategic Information in Digital Competitive Markets," Post-Print hal-01794886, HAL.
    • Handle: RePEc:hal:journl:hal-01794886
    Note: View the original document on HAL open archive server: https://hal.science/hal-01794886v3
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    References listed on IDEAS

    as
    1. Jeremy M. Burke & Curtis R. Taylor & Liad Wagman, 2012. "Information Acquisition in Competitive Markets: An Application to the US Mortgage Market," American Economic Journal: Microeconomics, American Economic Association, vol. 4(4), pages 65-106, November.
    2. Michael R. Baye & John Morgan, 2001. "Information Gatekeepers on the Internet and the Competitiveness of Homogeneous Product Markets," American Economic Review, American Economic Association, vol. 91(3), pages 454-474, June.
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    Cited by:

    1. Yiquan Gu & Leonardo Madio & Carlo Reggiani, 2022. "Data brokers co-opetition [The impact of big data on firm performance: an empirical investigation]," Oxford Economic Papers, Oxford University Press, vol. 74(3), pages 820-839.
    2. Yiquan Gu & Leonardo Madio & Carlo Reggiani, 2019. "Exclusive Data, Price Manipulation and Market Leadership," CESifo Working Paper Series 7853, CESifo.

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    Keywords

    Data broker; Information Structure; Price-discrimination;
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