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The impact of access to consumer data on the competitive effects of horizontal mergers and exclusive dealing

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  • Jin‐Hyuk Kim
  • Liad Wagman
  • Abraham L. Wickelgren

Abstract

We examine the influence of firms’ ability to employ individualized pricing on the welfare consequences of horizontal mergers. In a two‐to‐one merger, the merger reduces consumer surplus more when firms can price discriminate based on individual preferences compared to when they cannot. However, the opposite holds true in a three‐to‐two merger, in which the reduction in consumer surplus is substantially lower with individualized pricing than with uniform pricing. Further, the merger requires an even smaller marginal cost reduction to justify when an upstream data provider can make exclusive offers for its data to downstream firms. We also show that exclusive contracts for consumer data pose significant antitrust concerns independent of merger considerations. Implications for vertical integration and data mergers are drawn.

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  • Jin‐Hyuk Kim & Liad Wagman & Abraham L. Wickelgren, 2019. "The impact of access to consumer data on the competitive effects of horizontal mergers and exclusive dealing," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 28(3), pages 373-391, June.
    • Handle: RePEc:bla:jemstr:v:28:y:2019:i:3:p:373-391
    DOI: 10.1111/jems.12285
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    Cited by:

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    6. Yiquan Gu & Leonardo Madio & Carlo Reggiani, 2022. "Data brokers co-opetition [The impact of big data on firm performance: an empirical investigation]," Oxford Economic Papers, Oxford University Press, vol. 74(3), pages 820-839.
    7. Paul Belleflamme & Wing Man Wynne Lam, & Wouter Vergote, 2020. "Competitive Imperfect Price Discrimination and Market Power," Marketing Science, INFORMS, vol. 39(5), pages 996-1015, September.
    8. Jean-Marc Zogheib & Marc Bourreau, 2021. "Privacy, Competition, and Multi-Homing," EconomiX Working Papers 2021-15, University of Paris Nanterre, EconomiX.
    9. Miguel Godinho de Matos & Idris Adjerid, 2022. "Consumer Consent and Firm Targeting After GDPR: The Case of a Large Telecom Provider," Management Science, INFORMS, vol. 68(5), pages 3330-3378, May.
    10. Alessandro Acquisti & Curtis Taylor & Liad Wagman, 2016. "The Economics of Privacy," Journal of Economic Literature, American Economic Association, vol. 54(2), pages 442-492, June.
    11. Jean-Marc Zogheib, 2023. "Competition, Privacy, and Multi-Homing," EconomiX Working Papers 2023-34, University of Paris Nanterre, EconomiX.

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