Can data openness unlock competition when the incumbent has exclusive data access for personalized pricing?

Rosa Branca Esteves () and Francisco Carballo-Cruz ()
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Rosa Branca Esteves: Universidade do Minho and NIPE
Francisco Carballo-Cruz: Universidade do Minho and NIPE

No 16/2021, NIPE Working Papers from NIPE - Universidade do Minho

Abstract: This paper investigates the role of an incumbent´s data investment decisions in shaping the competitive interaction of firms and market structure. We provide antitrust agencies with some insights that may help them to determine whether and when personalized pricing (PP) by a dominant firm, which is enabled by the use of exclusive data, dampens competition and harms consumers. In markets with intermediate entry costs, where entry is blocked without any intervention, a data openness remedy, by means of a mandatory information sharing, is an effective tool to restore competition and boost consumer welfare. Even in markets where entry is inevitable, due to low entry costs, a mandatory information sharing to promote competitive PP further boosts consumer surplus in comparison to the case where only the incumbent employs PP. In contrast, public agencies should consider a ban on PP in markets with sufficiently high entry costs. In these markets, a mandatory information sharing remedy would simply not produce the desired competitive outcome.

Keywords: Price discrimination; data investments; data barrier to entry; information; sharing; digital markets; GDPR; competition policy and regulation. (search for similar items in EconPapers)
JEL-codes: D43 L13 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-com, nep-law, nep-mic and nep-reg
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Citations: View citations in EconPapers (1)

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