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Title:Targeted pricing and customer data sharing among rivals PDF Logo
Authors:Jentzsch, Nicola
Sapi, Geza
Suleymanova, Irina
Issue Date:2012
Series/Report no.:DICE Discussion Paper 60
Abstract:It is increasingly observable that competitors in different industries share customer data, which can be used for targeted pricing. We propose a modified Hotelling model with two-dimensional consumer heterogeneity to analyze the incentives for such sharing and its ensuing welfare effects. We show that these incentives depend on the type of customer data and on consumer heterogeneity in the strength of brand preferences. Only data on consumer transportation cost parameters is shared. The incentives to do so are stronger if consumers are relatively homogeneous. Customer data sharing is most likely to be detrimental to consumer surplus, while the effect on social welfare can be positive.
Subjects:Customer Data Sharing
Price Discrimination
JEL:D43
L13
L15
O30
ISBN:978-3-86304-059-8
Document Type:Working Paper
Appears in Collections:DICE Discussion Paper, Düsseldorf Institute for Competition Economics (DICE)

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