Should Mobile Marketers Collect Data Other Than Geo‐Location?

Irina Baye and Geza Sapi ()

Scandinavian Journal of Economics, 2019, vol. 121, issue 2, 647-675

Abstract: We take today's mobile marketing data landscape as a starting point and consider a duopoly model of third‐degree price discrimination in which firms can complement geo‐location information with data on consumer flexibility of varying quality. We show that, depending on consumer heterogeneity, higher‐quality flexibility data affect profits according to three different patterns. In equilibrium, both firms tend to acquire data if the data are of high quality, while only one acquires data if the data quality is low. Firms are likely to gain from additional data if consumers have similar preferences and/or when data are precise. Although social welfare (weakly) improves, consumers can be harmed.

Date: 2019
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