Mobility Data, Competition and Strategic Location

Abstract

The growing availability of mobility data has provided new insights into consumer travel patterns. This paper studies how such data, and the mobility patterns it reveals, affect the pricing and location decisions of two competing firms, the value of the data to an intermediary, and the resulting welfare implications. We consider a setting in which consumers commute from suburban homes to downtown workplaces. Firms choose whether to locate in the suburbs or downtown. We show that firms choose downtown locations only when the volume of commuting is moderate. If commuting is low, there are too few customers downtown; if commuting is high, intensified competition makes suburban locations more attractive. When both firms locate in the suburbs without data, the intermediary optimally sells to a single firm, whereas they potentially sell data to both firms when there is a firm downtown in the no data case. Mobility data can reduce overall welfare in cities with large but low-activity downtowns, or in compact downtowns with high levels of retail activity.

Keywords: mobility data, location and price competition, equilibrium analysis