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Data and Competition: A Simple Framework

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  • de Cornière, Alexandre
  • Taylor, Greg

Abstract

Does enhanced access to data foster or hinder competition among firms? Using a competition-in-utility framework that encompasses many situations where firms use data, we model data as a revenue-shifter and identify two opposite effects: a mark-up effect according to which data induces firms to compete harder, and a surplus-extraction effect. We provide conditions for data to be pro- or anti-competitive, requiring neither knowledge of demand nor computation of equilibrium. We apply our results to situations where data is used to recommend products, monitor insuree behavior, price-discriminate, or target advertising. We also revisit the issue of data and market structure.

Suggested Citation

  • de Cornière, Alexandre & Taylor, Greg, 2023. "Data and Competition: A Simple Framework," TSE Working Papers 23-1404, Toulouse School of Economics (TSE), revised Aug 2024.
    • Handle: RePEc:tse:wpaper:32535
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    References listed on IDEAS

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    More about this item

    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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