Adrien Vigier, University of Nottingham

"Market Segmentation, Information Sale, and Information Foreclosure"

Abstract

We study the sale of consumer data allowing firms to engage in discriminatory pricing. When an independent data intermediary sells information, the consumer surplus is as if all firms were fully informed. We then consider the case where the data intermediary also competes in the final goods market. We show that the integrated data intermediary may choose not to sell full information to its rivals; this strategic behavior lowers consumer surplus. We study the industry’s equilibrium structure and show that acquiring a firm by an independent data intermediary always reduces consumer surplus. We apply the insights of our analysis to the debate on self-preferencing in the digital advertising industry.

Contact person: Egor Starkov