Market concentration and the effect of data sales

In this paper we analyse how the impact of a Data Broker (DB) on a downstream market is influenced by that market’s concentration and his selling strategies, in a scenario where data enable price discrimination. We do so under two selling mechanisms (i.e., take it or leave it and auction). We find that under take it or leave it the DB opts for selling all consumer data in concentrated markets, while he prefers leaving some consumers unidentified in less concentrated ones. On the other hand, the DB always leaves some unidentified consumers under the auction mechanism, regardless of market concentration. This has important policy implications, as higher amounts of data sold lead to lower prices and a higher consumer surplus. As the DB’s incentive to temper competition changes according to market concentration and the selling strategies available, we identify possible ways for a policymaker to guide market outcomes.