Selling Data to a Competitor (Extended Abstract)

Ronen Gradwohl and Moshe Tennenholtz
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Ronen Gradwohl: Ariel University
Moshe Tennenholtz: Technion

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Abstract: We study the costs and benefits of selling data to a competitor. Although selling all consumers' data may decrease total firm profits, there exist other selling mechanisms -- in which only some consumers' data is sold -- that render both firms better off. We identify the profit-maximizing mechanism, and show that the benefit to firms comes at a cost to consumers. We then construct Pareto-improving mechanisms, in which each consumers' welfare, as well as both firms' profits, increase. Finally, we show that consumer opt-in can serve as an instrument to induce firms to choose a Pareto-improving mechanism over a profit-maximizing one.

Date: 2023-07
New Economics Papers: this item is included in nep-bec and nep-mic
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Published in EPTCS 379, 2023, pp. 318-330

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Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:2307.05078

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