Access to Data for Personalized Pricing: Can it raise entry barriers and abuse of dominance concerns?

Rosa Esteves () and Francisco Carballo-Cruz ()
Additional contact information
Francisco Carballo-Cruz: Department of Economics/NIPE, University of Minho

No 05/2021, NIPE Working Papers from NIPE - Universidade do Minho

Abstract: This paper offers some insights for competition policy agencies in charge of determining whether the use of data by dominant firms can harm competition and consumers. When the welfare criterion is consumer surplus we show that in markets characterized by sufficiently low entry costs, the ability of the incumbent firm to price discriminate is not enough to exclude the rival from the market. In this case, we show that price discrimination intensifies competition and overall consumer surplus is above its non-discrimination counterpart. In these markets there are no reasons to block price discrimination. In contrast, in markets with intermediate values of entry costs, the incumbent access to data for personalised prices, might act as an important barrier to entry. With no intervention, the entrant would decide to stay out and the incumbent would be able to increase profits at the expense of consumer welfare.

Keywords: Data-driven strategies; digital markets; price discrimination; competition policy and regulation. (search for similar items in EconPapers)
JEL-codes: D43 L13 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-com and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://repositorium.sdum.uminho.pt/bitstream/1822/72598/1/WP%2005.2021.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nip:nipewp:5/2021

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in NIPE Working Papers from NIPE - Universidade do Minho Núcleo de Investigação em Políticas Económicas e Empresariais, Escola de Economia e Gestão, Universidade do Minho, P-4710-057 Braga, Portugal. Contact information at EDIRC.
Bibliographic data for series maintained by NIPE ().