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Selling customer information to competing firms

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Title: Selling customer information to competing firms
Authors: Valletti, T
Clavora', F
Item Type: Journal Article
Abstract: We consider a data broker that holds precise information about customer preferences. The data broker can sell this data set either exclusively to one of two differentiated competing firms, or to both of them. If a downstream firm obtains the data set, it can practice personalized pricing, else it has to offer a uniform price to customers. The first-best allocation can be achieved when data are sold non exclusively, but this never arises in equilibrium. The data broker instead sells the data set exclusively either to the high quality firm or to the low quality firm rival, according to their quality-adjusted cost differential. This leads to inefficient allocations.
Issue Date: 12-Oct-2016
Date of Acceptance: 7-Oct-2016
URI: http://hdl.handle.net/10044/1/41286
DOI: https://dx.doi.org/10.1016/j.econlet.2016.10.005
ISSN: 0165-1765
Publisher: Elsevier
Start Page: 10
End Page: 14
Journal / Book Title: Economics Letters
Volume: 149
Copyright Statement: © 2016, Elsevier. Licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International http://creativecommons.org/licenses/by-nc-nd/4.0/
Keywords: Economics
Publication Status: Published
Appears in Collections:Imperial College Business School