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Selling Data to a Competitor
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We study the costs and benefits of selling data to a competitor. Although selling all consumers' data may decrease total firm profits, there exist other selling mechanisms -- in which only some consumers' data is sold -- that render both firms better off. We identify the profit-maximizing mechanism, and show that the benefit to firms comes at a cost to consumers. We then construct Pareto-improving mechanisms, in which each consumers' welfare, as well as both firms' profits, increase. Finally, we show that consumer opt-in can serve as an instrument to induce firms to choose a Pareto-improving mechanism over a profit-maximizing one.
Forward citations
Cited by 2 Pith papers
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Selling Information in Games with Externalities
In a binary two-player game where the informed seller competes with a privately informed buyer, the profit-maximizing menu sells full information or none, and above a competition threshold the seller optimally sells n...
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Data Sharing with a Generative AI Competitor
In a two-stage data-sharing game, the unique equilibrium is either that the firm shares just enough data to stop the platform buying expert data, or that the firm shares an amount that maximizes its payoff while the p...
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