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How Do Competition Policy and Data Brokers Shape Product Market Competition?

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  • Koski, Heli

Abstract

This paper empirically analyzes how a data broker affects competition in oligopolistic product markets. It examines a unique case concerning the two dominant Finnish food retail companies’ voluntary withdrawal from information exchange via a data broker. Moreover, the companies jointly approached the Finnish antitrust authority, originating an investigation whether their prior horizontal information exchange was illegal. This resulted in the permanent termination of a data broker’s business in the Finnish food retail sector. The empirical analysis employs quarterly data from the food retail sector of the old EU15 countries for 2005–2017. The difference-in-differences model is used to explore the competitive impacts of a termination of vertical and horizontal information exchange via a data broker in the Finnish food retail sector. Data suggest that competition was less fierce and product prices higher after the termination of information exchange via a data broker. Longer-term evidence on the price increase in the absence of a data broker is inconclusive. Furthermore, discontinuation of data exchange from the downstream to the upstream firms facilitated downstream bargaining power and generated a long-term increase in the gap between retail and producer prices.

Suggested Citation

  • Koski, Heli, 2018. "How Do Competition Policy and Data Brokers Shape Product Market Competition?," ETLA Working Papers 61, The Research Institute of the Finnish Economy.
    • Handle: RePEc:rif:wpaper:61
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    More about this item

    Keywords

    Data brokers; Market for data; Competition; Competition policy;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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