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Regulating data sales: The role of data selling mechanisms

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  • Abrardi, Laura
  • Cambini, Carlo
  • Pino, Flavio

Abstract

We analyze the effects of different data selling mechanisms of a monopolistic Data Broker (DB) who sells consumer data to firms in a downstream market with free entry, where data can be used for consumer price discrimination. We consider three possible data selling mechanisms, namely auctions with and without reserve prices, and Take-It-Or-Leave-It offers, which exhibit decreasing levels of DB’s bargaining power towards firms. We highlight the emergence of an entry barrier effect in the downstream market, regardless of the data selling mechanism. Moreover, we show that the auction-based selling mechanisms, and particularly the auction with reserve prices, induce the DB to sell the lowest quantity of data, implying the lowest level of consumer surplus. Conversely, under TIOLI, the DB floods the market for data, selling to all firms data partitions that overlap over subsets of consumers. Imposing the sale of non-overlapping partitions to all firms would improve consumer surplus and welfare.

Suggested Citation

  • Abrardi, Laura & Cambini, Carlo & Pino, Flavio, 2024. "Regulating data sales: The role of data selling mechanisms," Telecommunications Policy, Elsevier, vol. 48(8).
    • Handle: RePEc:eee:telpol:v:48:y:2024:i:8:s0308596124001101
    DOI: 10.1016/j.telpol.2024.102813
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    1. Lili Chen, 2024. "Data assetization and capital market information efficiency: evidence from Hidden Champion SMEs in China," Future Business Journal, Springer, vol. 10(1), pages 1-23, December.

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    More about this item

    Keywords

    Data Broker; Price discrimination; Competition; Auctions; TIOLI; Entry;
    All these keywords.

    JEL classification:

    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

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