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

19 Pages Posted: 28 May 2020

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: Fall 2019

Abstract

We examine the influence of firms’ ability to employ individualized pricing on the welfare consequences of horizontal mergers. 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 merger requires an even smaller marginal cost reduction to justify when an upstream data provider can make exclusive offers for its data to downstream firms. We also show that exclusive contracts for consumer data pose significant antitrust concerns independent of merger considerations. Implications for vertical integration and data mergers are drawn.

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 and Exclusive Dealing (Fall 2019). Journal of Economics & Management Strategy, Vol. 28, Issue 3, pp. 373-391, 2019, Available at SSRN: https://ssrn.com/abstract=3607390 or http://dx.doi.org/10.1111/jems.12285

Jin-Hyuk Kim (Contact Author)

University of Colorado at Boulder ( email )

Campus Box 256
Boulder, CO 80309
United States

Liad Wagman

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

565 W Adams St Suite 412
Chicago, IL 60661
United States
7739809883 (Phone)

HOME PAGE: http://https://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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