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Data portability and competition: Can data portability increase both consumer surplus and profits?

Author

Listed:
  • Doh-Shin Jeon

    (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - Comue de Toulouse - Communauté d'universités et établissements de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Domenico Menicucci

    (UniFI - Università degli Studi di Firenze = University of Florence = Université de Florence)

Abstract

We study how data portability affects consumer surplus and firms' profits in a two-period model with a switching cost where two firms compete under a non-negative pricing constraint. The firms can circumvent the constraint by tying another complementary free service (called "freebies") with the original service. We consider a general framework of incomplete pass-through of freebies into consumer benefit, which includes the two extreme cases of no pass-through and full pass-through as special cases. Regarding the effect on consumer surplus, data portability involves a trade-off between intensifying competition after consumer lock-in and reducing rent dissipation before consumer lock-in. We find that for an intermediate range of pass-through rates, data portability increases both consumer surplus and profits.

Suggested Citation

  • Doh-Shin Jeon & Domenico Menicucci, 2023. "Data portability and competition: Can data portability increase both consumer surplus and profits?," Post-Print hal-04216623, HAL.
    • Handle: RePEc:hal:journl:hal-04216623
    DOI: 10.1007/s10657-023-09774-9
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    Cited by:

    1. is not listed on IDEAS
    2. Eger Thomas & Scheufen Marc, 2024. "Data Sharing in Deutschland: Theorie, Empirie und europäische Gesetzgebung," Wirtschaftsdienst, Sciendo, vol. 104(10), pages 725-729.

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    Keywords

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    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality

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