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Data and Competition: a Simple Framework with Applications to Mergers and Market Structure

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  • de Cornière, Alexandre
  • Taylor, Greg

Abstract

What role does data play in competition? This question has been at the center of a fierce debate around competition policy in the digital economy. We provide a simple framework for studying the competitive effects of data, encompassing a wide range of applications (product improvement, targeted advertising, price-discrimination) using a competition-in-utilities approach. We model data as a revenue-shifter, and identify conditions for data to be pro- or anti-competitive. The conditions are simple and often do not require knowledge of market demand or calculation of equilibrium. We use this framework to address policy-relevant questions related to market structure and data-driven mergers. We show that the effects of a data-driven merger between firms operating on adjacent markets depend both on whether data is pro- or anti-competitive and on firms' ability to trade data absent the merger.

Suggested Citation

  • de Cornière, Alexandre & Taylor, Greg, 2022. "Data and Competition: a Simple Framework with Applications to Mergers and Market Structure," CEPR Discussion Papers 14446, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:14446
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    More about this item

    Keywords

    Competition; Big data; Data-driven mergers; Privacy;
    All these keywords.

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L4 - Industrial Organization - - Antitrust Issues and Policies
    • L5 - Industrial Organization - - Regulation and Industrial Policy

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