Discussion paper
DP18691 Market Segmentation, Information Sale, and Information Foreclosure
We study the sale of consumer data allowing firms to engage in discriminatory pricing. When information is sold by an independent data intermediary, the resulting consumer surplus is as if all firms were fully informed. We then consider the case in which the seller of information also competes in the goods market, and show that the seller of information may choose not to sell full information to its rivals; this strategic behavior ends up lowering consumer surplus. Lastly, we show that the acquisition of a firm by an independent data intermediary always reduces consumer surplus.
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