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Targeted pricing and customer data sharing among rivals

Nicola Jentzsch, Geza Sapi () and Irina Suleymanova

International Journal of Industrial Organization, 2013, vol. 31, issue 2, 131-144

Abstract: It is increasingly observable that competitors in different industries share customer data, which can be used for targeted pricing. We propose a modified Hotelling model with two-dimensional consumer heterogeneity to analyze the incentives for such sharing and its ensuing welfare effects. We show that these incentives depend on the type of customer data and on consumer heterogeneity in the strength of brand preferences. Only data on consumer transportation cost parameters is shared. The incentives to do so are stronger if consumers are relatively homogeneous. Customer data sharing is most likely to be detrimental to consumer surplus, while the effect on social welfare can be positive.

Keywords: Customer data sharing; Price discrimination; Modified Hotelling model (search for similar items in EconPapers)
JEL-codes: D43 L13 L15 O30 (search for similar items in EconPapers)
Date: 2013
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Related works:
Working Paper: Targeted pricing and customer data sharing among rivals (2012) Downloads
Working Paper: Joint Customer Data Acquisition and Sharing among Rivals (2010) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:31:y:2013:i:2:p:131-144

DOI: 10.1016/j.ijindorg.2012.11.004

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