Softening competition through unilateral sharing of customer data

Research output: Contribution to journalArticleResearchpeer-review

Abstract

We study how a data-rich firm can benefit by unilaterally sharing its customer
data with a data-poor competitor when the data can be used for price discrimination. By sharing data on the segment of market that is more loyal to the
competitor while keeping the data on the competitor’s most loyal segment to
itself, the firm can induce the competitor to raise its price for consumers it
does not have data on. Such data sharing is an example of a fat-cat strategy
as it softens price competition that follows data sharing. Although consumer
surplus decreases as a result of data sharing, total surplus can increase when
the sharing firm concedes its market share to the competitor, which improves
the quality of consumer-firm matching.
Original languageEnglish
Number of pages18
JournalManagement Science
DOIs
Publication statusAccepted/In press - 2023

Keywords

  • customer data sharing
  • price discrimination

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