Non-competing Data Intermediaries

Shota Ichihashi

Staff Working Papers from Bank of Canada

Abstract: I study a model of competing data intermediaries (e.g., online platforms and data brokers) that collect personal data from consumers and sell it to downstream firms. Competition in this market has a limited impact in terms of benefits to consumers: If intermediaries offer high compensation for their data, then consumers may share this data with multiple intermediaries, and this lowers its downstream price and hurts intermediaries. As intermediaries anticipate this problem, they offer low compensation for this data. Competing intermediaries can earn a monopoly profit if and only if firms’ data acquisition unambiguously hurts consumers. I generalize the results to include arbitrary consumer preferences and study the information design of data intermediaries. The results provide new insights into when competition among data intermediaries benefits consumers. It also highlights the limits of competition in terms of improving efficiency in the market for data.

Keywords: Economic; models (search for similar items in EconPapers)
JEL-codes: D80 L12 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2020-07
New Economics Papers: this item is included in nep-com and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:bca:bocawp:20-28

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