Joint Customer Data Acquisition and Sharing Among Rivals

40 Pages Posted: 16 Aug 2010

See all articles by Nicola Jentzsch

Nicola Jentzsch

DIW Berlin

Geza Sapi

German Institute for Economic Research (DIW Berlin); Technische Universität Berlin (TU Berlin)

Irina Suleymanova

German Institute for Economic Research (DIW Berlin)

Date Written: August 1, 2010

Abstract

It is increasingly observable that in different industries competitors jointly acquire and share customer data. We propose a modified Hotelling model with two-dimensional consumer heterogeneity to analyze the incentives for such agreements and their welfare implications. In our model the incentives of firms for data acquisition and sharing depend on the willingness of consumers to switch brands. Firms jointly collect data on transportation cost parameters when consumers are relatively immobile between brands. However, the firms are unlikely to cooperatively acquire such data, when consumers are relatively mobile. Incentives to share information depend on the portfolio of data firms hold and consumer mobility. Data sharing arises with relatively mobile and immobile consumers - it is neutral for consumers in the former case, but reduces consumer surplus in the latter. Competition authorities ought to scrutinize such cooperation agreements on a case-by-case basis and devote special attention to consumer switching behavior.

Keywords: Information Sharing, Data Acquisition, Price Discrimination

JEL Classification: D43, L13, L15, O30

Suggested Citation

Jentzsch, Nicola and Sapi, Geza and Suleymanova, Irina, Joint Customer Data Acquisition and Sharing Among Rivals (August 1, 2010). DIW Berlin Discussion Paper No. 1045, Available at SSRN: https://ssrn.com/abstract=1659712 or http://dx.doi.org/10.2139/ssrn.1659712

Nicola Jentzsch (Contact Author)

DIW Berlin ( email )

Mohrenstraße 58
Berlin, 10117
Germany

Geza Sapi

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

Technische Universität Berlin (TU Berlin) ( email )

Straße des 17
Juni 135
Berlin, 10623
Germany

Irina Suleymanova

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

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