Customer Information Sharing: Strategic Incentives and New Implications

31 Pages Posted: 17 May 2010

See all articles by Byung-Cheol Kim

Byung-Cheol Kim

University of Alabama

Jay Pil Choi

Michigan State University - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

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Abstract

We study oligopolistic firms' incentives to share customer information about past purchase history when firms are uncertain about whether a particular consumer considers the product offerings as complements or substitutes. We show that both the incentive to share customer information and its effects on consumers depend crucially on the relative magnitudes of the prices that would prevail in the complementary and substitute markets if consumers were fully segmented according to their preferences. This paper has important implications for merger analysis when the primary motive for merger is the acquisition of another firm's customer lists. Our analysis also suggests a new role of middlemen as information aggregators.

Suggested Citation

Kim, Byung-Cheol and Choi, Jay Pil, Customer Information Sharing: Strategic Incentives and New Implications. Journal of Economics & Management Strategy, Vol. 19, Issue 2, pp. 403-433, Summer 2010, Available at SSRN: https://ssrn.com/abstract=1608073 or http://dx.doi.org/10.1111/j.1530-9134.2010.00256.x

Byung-Cheol Kim (Contact Author)

University of Alabama ( email )

Culverhouse College of Business
Tuscaloosa, AL 35487-0223
United States
7708462727 (Phone)
7708462727 (Fax)

HOME PAGE: http://https://sites.google.com/site/byungcheolkim76/

Jay Pil Choi

Michigan State University - Department of Economics ( email )

101 Marshall Hall
East Lansing, MI 48824
United States
517-353-7281 (Phone)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

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