Dr. Carlo Reggiani // The University of Manchester, United KingdomTo the profile
Exclusive Data, Price Manipulation, and Market LeadershipResearch Seminars
The unprecedented access of firms to consumer level data not only facilitates more precisely targeted individual pricing but also alters firms' strategic incentives. The authors of the paper presented in this MaCCI/EPoS Virtual IO Seminar show that exclusive access to a list of consumers can provide incentives for a firm to endogenously assume the price leader's role, and so to strategically manipulate its rival's price. Prices and profits are non-monotonic in the length of the consumer list. For an intermediate size, price leadership entails a semi-collusive outcome, characterized by supra-competitive prices and low consumer surplus. In contrast, for short or long lists of consumers, exclusive data availability intensifies market competition.