Search, Data, and Market Power

Carl-Christian Groh ()

CRC TR 224 Discussion Paper Series from University of Bonn and University of Mannheim, Germany

Abstract: I study the relationship between data and market power in a duopoly model of price discrimination with search frictions. One firm receives a signal about the valuation of any arriving consumer while its rival receives no information. A share of consumers, referred to as searchers, have equal valuation for the good of either firm and optimally choose which firms to visit. The remaining consumers are captive. In equilibrium, a large majority of searchers will only visit the firm with data. The market share of the firm with data converges to one as the share of searchers in the market goes to one, regardless of the signal structure. Reductions of search frictions induce higher market concentration. The establishment of a right to data portability can address the competitive imbalances caused by data advantages.

Keywords: search; information exchange; antitrust; price discrimination approach; German Competition Act; 19a designations; competition law (search for similar items in EconPapers)
JEL-codes: D18 D83 L13 L86 (search for similar items in EconPapers)
Pages: 87
Date: 2022-11
New Economics Papers: this item is included in nep-bec, nep-com, nep-ind, nep-mic and nep-reg
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Persistent link: https://EconPapers.repec.org/RePEc:bon:boncrc:crctr224_2022_383

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