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Should vertically integrated platforms be mandated to share information with their rivals?

Author

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  • Padilla, Jorge
  • Piccolo, Salvatore
  • Vasconcelos, Helder

Abstract

We examine a vertically integrated platform’s incentives to share demand information with a ‘third-party’ seller. When consumers perceive the platform’s private label and the seller’s products as relatively close substitutes, and quality strongly affects demand, the platform tends not to share information with the seller. We find that consumers are often better off without information sharing even in the absence of explicit privacy concerns, since information sharing facilitates rent extraction via targeted prices. The region of parameters where this occurs expands as the platform’s bargain power vis-à-vis the seller increases.

Suggested Citation

  • Padilla, Jorge & Piccolo, Salvatore & Vasconcelos, Helder, 2021. "Should vertically integrated platforms be mandated to share information with their rivals?," Economics Letters, Elsevier, vol. 203(C).
  • Handle: RePEc:eee:ecolet:v:203:y:2021:i:c:s0165176521001269
    DOI: 10.1016/j.econlet.2021.109849
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    References listed on IDEAS

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    Cited by:

    1. Jorge Padilla & Salvatore Piccolo & Helder Vasconcelos, 2022. "Business models, consumer data and privacy in platform markets," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 49(3), pages 599-634, September.
    2. Gregor Langus & Vilen Lipatov, 2022. "Value Creation by Ad-Funded Platforms," CESifo Working Paper Series 9525, CESifo.

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    More about this item

    Keywords

    Consumer data; Information sharing; Price discrimination; Product quality; Vertically integrated platforms;
    All these keywords.

    JEL classification:

    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • M3 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising

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