Welfare Implications of Proprietary Data Collection: An Application to Telematics in Auto Insurance
35 Pages Posted: 2 Mar 2018 Last revised: 8 Jun 2018
Date Written: May 29, 2018
Concerns about anti-competitive effects of proprietary data collection have motivated recent European data portability laws. We investigate such concerns and search for evidence of direct benefits of data collection in the context of Pay How You Drive (PHYD) auto insurance, which offers tailored discounts to drivers monitored by telematics devices. We exploit the staggered entry of PHYD insurance across states and insurers in a difference-in-differences framework, and we replicate the main findings using state insurance regulations as instruments for entry timing. We find a meaningful impact of PHYD programs on fatal accidents, but we find no evidence of antitrust concerns.
Keywords: Proprietary data, data portability, oligopoly, competition, asymmetric information
JEL Classification: D43, D82, L13, L40
Suggested Citation: Suggested Citation