Customer Infomation Sharing: Strategic Incentives and New Implications
AbstractWe study oligopolistic firms' incentives to share customer information about past purchase history in a situation where firms are uncertain about whether a particular consumer considers the product offerings complements or substitutes. By addressing this new type of behavior-based price discrimination, we show that both the incentive to share customer information and its effects on consumers depend crucially on the relative magnitudes of the prices that would prevail in the complementary and substitute markets if consumers were fully segmented according to their preferences. This paper has important implications for merger analysis when the primary motive for merger is the acquisition of another firm's customer lists. We also find that the informational regime in which firms reside can have an influence upon the choice of product differentiation. Additionally, our analysis suggests a new role of middlemen as information aggregators.
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Bibliographic InfoPaper provided by NET Institute in its series Working Papers with number 07-27.
Length: 30 pages
Date of creation: Sep 2007
Date of revision: Sep 2007
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Web page: http://www.NETinst.org/
Customer Information Sharing; Complements and Substitutes; Product Differentiation; Behavior-Based Price Discrimination; Merger and Acquisition; Middlemen;
Other versions of this item:
- Byung-Cheol Kim & Jay Pil Choi, 2010. "Customer Information Sharing: Strategic Incentives and New Implications," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 19(2), pages 403-433, 06.
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- D62 - Microeconomics - - Welfare Economics - - - Externalities
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
- L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- M31 - Business Administration and Business Economics; Marketing; Accounting - - Marketing and Advertising - - - Marketing
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-10-27 (All new papers)
- NEP-BEC-2007-10-27 (Business Economics)
- NEP-COM-2007-10-27 (Industrial Competition)
- NEP-CSE-2007-10-27 (Economics of Strategic Management)
- NEP-MKT-2007-10-27 (Marketing)
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- Bernard Caillaud & Romain De Nijs, 2011. "Strategic loyalty reward in dynamic price Discrimination," Working Papers halshs-00622291, HAL.
- Bernard Caillaud & Romain De Nijs, 2011. "Strategic loyalty reward in dynamic price Discrimination," PSE Working Papers halshs-00622291, HAL.
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