Digital Ecosystems and Data Regulation

Andrew Rhodes, Jidong Zhou and Junjie Zhou

No 25-1621, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: This paper develops a framework in which a multiproduct ecosystem competes with multiple single-product firms in both price and innovation. The ecosystem can use data from one product to improve the quality of its other products. We use the framework to study three regulatory policies aimed at leveling the playing field. Restricting the ecosystem’s cross-product data usage, or forcing it to share data with single-product firms, benefits those firms and induces them to innovate more. However, these policies also dampen the ecosystem’s incentive to collect data and innovate, potentially raising prices. Consumers are better off only when single-product firms are sufficiently good at innovating. Facilitating data exchange between single-product firms via a data cooperative can backfire and harm them, because it induces the ecosystem to price more aggressively. For both the data-sharing and data-cooperative policies, there exist data-compensation schemes such that consumers are better off compared to no regulation.

Keywords: digital ecosystems; innovation; data regulation; data cooperative (search for similar items in EconPapers)
JEL-codes: D43 L13 L51 (search for similar items in EconPapers)
Date: 2025-02, Revised 2026-02
New Economics Papers: this item is included in nep-com, nep-cta, nep-ind, nep-mic and nep-reg
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Related works:
Working Paper: Digital Ecosystems and Data Regulation (2025)
Working Paper: Digital Ecosystems and Data Regulation (2025)
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Persistent link: https://EconPapers.repec.org/RePEc:tse:wpaper:130354

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