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Data Linkage between Markets: Does the Emergence of an Informed Insurer Cause Consumer Harm?

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Listed:
  • Herresthal, Claudia
  • Mayskaya, Tatiana
  • Nikandrova, Arina

Abstract

A merger of two companies that are active in seemingly unrelated markets creates data linkage: by selling a product in one market, the merged company acquires informational advantage in a competitive insurance market. In the insurance market, the informed insurer earns an economic rent through cream-skimming. Some of this rent is competed away in the product market. Overall, the data linkage makes the consumers better off. The role of competitiveness of each market, the possibility of market monopolization and data-sharing requirement are discussed.

Suggested Citation

  • Herresthal, Claudia & Mayskaya, Tatiana & Nikandrova, Arina, 2023. "Data Linkage between Markets: Does the Emergence of an Informed Insurer Cause Consumer Harm?," CEPR Discussion Papers 17947, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:17947
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    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • 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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