Premium
Customer Information Sharing: Strategic Incentives and New Implications
Author(s) -
Kim ByungCheol,
Choi Jay Pil
Publication year - 2010
Publication title -
journal of economics and management strategy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.672
H-Index - 68
eISSN - 1530-9134
pISSN - 1058-6407
DOI - 10.1111/j.1530-9134.2010.00256.x
Subject(s) - incentive , oligopoly , business , industrial organization , marketing , information sharing , product (mathematics) , microeconomics , strategic complements , economics , cournot competition , computer science , world wide web , geometry , mathematics
We study oligopolistic firms' incentives to share customer information about past purchase history when firms are uncertain about whether a particular consumer considers the product offerings as complements or substitutes. We show that both the incentive to share customer information and its effects on consumers depend crucially on the relative magnitudes of the prices that would prevail in the complementary and substitute markets if consumers were fully segmented according to their preferences. This paper has important implications for merger analysis when the primary motive for merger is the acquisition of another firm's customer lists. Our analysis also suggests a new role of middlemen as information aggregators.