Big Data, Price Discrimination, and Antitrust

Abstract

Antitrust guarantees a particular distribution of wealth between consumers and producers. Big data allows firms with pricing power to identify the highest price a consumer is willing to pay for a good and charge it to her. The practice upends the current distribution of wealth by allowing firms to charge the highest possible prices to everyone. Current antitrust rules cannot respond because they proscribe the formation, but not the exercise, of pricing power. Two options preserve the current distribution of wealth. One is deconcentration of industry. The other is use by government of big data to set prices.

Keywords: big data, price discrimination, antitrust, rate regulation, deconcentration, Trade Regulation, Law and Economics, Law and Technology, Information Privacy

JEL Classification: D40, D60, K21, K23, L40, L50, P10