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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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    File URL: https://doi.org/10.1111/jems.12285
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    Cited by:

    1. 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.
    2. Yongmin Chen & Xinyu Hua & Keith E. Maskus, 2020. "International Protection of Consumer Data," CESifo Working Paper Series 8391, CESifo.
    3. Yiquan Gu & Leonardo Madio & Carlo Reggiani, 2019. "Data brokers co-opetition," CESifo Working Paper Series 7523, CESifo.

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