Data and competition: a simple framework

Alexandre De Cornière () and Greg Taylor ()
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Alexandre De Cornière: TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - Comue de Toulouse - Communauté d'universités et établissements de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement
Greg Taylor: University of Oxford

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Abstract: Does enhanced access to data foster or hinder competition among firms? Using a competition-in-utility framework that encompasses many situations where firms use data, we model data as a revenue-shifter and identify two opposite effects: a mark-up effect according to which data induces firms to compete harder, and a surplus-extraction effect. We provide conditions for data to be pro- or anti- competitive, requiring neither knowledge of demand nor computation of equilibrium. We apply our results to situations where data is used to recommend products, monitor insuree behavior, price-discriminate, or target advertising. We also revisit the issue of data and market structure.

Keywords: Market structure; Targeted advertising; Price discrimination; Data; Competition (search for similar items in EconPapers)
Date: 2025-11
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Published in RAND Journal of Economics, 2025, 56 (4), pp.494-510. ⟨10.1111/1756-2171.70020⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05489636

DOI: 10.1111/1756-2171.70020

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