The Impact of Access to Consumer Data on the Competitive Effects of Horizontal Mergers

37 Pages Posted: 8 Feb 2016 Last revised: 25 Nov 2016

See all articles by Jin-Hyuk Kim

Jin-Hyuk Kim

University of Colorado at Boulder

Liad Wagman

Illinois Institute of Technology - Stuart School of Business, IIT

Abraham L. Wickelgren

University of Texas at Austin - School of Law; University of Texas at Austin - Center for Law, Business, and Economics

Date Written: May 9, 2016

Abstract

The influence of firms’ ability to employ individualized pricing on the welfare consequences of horizontal mergers is examined in location models. In a two-to-one merger, the merger reduces consumer surplus more when firms can price discriminate based on individual preferences compared to when they cannot. However, the opposite holds true in a three-to-two merger, in which the reduction in consumer surplus is substantially lower with individualized pricing than with uniform pricing. Further, the three-to-two merger requires an even lesser marginal cost reduction to justify when an upstream data provider can make exclusive offers for its data to downstream firms.

Keywords: Price Discrimination, Consumer Privacy, Data Broker, Horizontal Merger

JEL Classification: K21, L11, L41

Suggested Citation

Kim, Jin-Hyuk and Wagman, Liad and Wickelgren, Abraham L., The Impact of Access to Consumer Data on the Competitive Effects of Horizontal Mergers (May 9, 2016). Available at SSRN: https://ssrn.com/abstract=2728378 or http://dx.doi.org/10.2139/ssrn.2728378

Jin-Hyuk Kim

University of Colorado at Boulder ( email )

Campus Box 256
Boulder, CO 80309
United States

Liad Wagman (Contact Author)

Illinois Institute of Technology - Stuart School of Business, IIT ( email )

565 W Adams St Suite 452
Chicago, IL 60661
United States
7739809883 (Phone)

HOME PAGE: http://lwagman.org

Abraham L. Wickelgren

University of Texas at Austin - School of Law ( email )

727 East Dean Keeton Street
Austin, TX 78705
United States

University of Texas at Austin - Center for Law, Business, and Economics

Austin, TX 78712
United States

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