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

Doh-Shin Jeon and Domenico Menicucci

European Journal of Law and Economics, 2024, vol. 57, issue 1, No 6, 145-162

Abstract: 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.

Keywords: Data portability; Switching cost; Non-negative pricing constraint; Freebies; Pass-through (search for similar items in EconPapers)
JEL-codes: D21 D43 L13 L15 (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (1)

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Working Paper: Data portability and competition: Can data portability increase both consumer surplus and profits? (2023)
Working Paper: Data Portability and Competition: Can Data Portability Increase both Consumer Surplus and Profits? (2023)
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DOI: 10.1007/s10657-023-09774-9

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