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Should Mobile Marketers Collect Data Other Than Geo‐Location? *
Author(s) -
Baye Irina,
Sapi Geza
Publication year - 2019
Publication title -
the scandinavian journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.725
H-Index - 64
eISSN - 1467-9442
pISSN - 0347-0520
DOI - 10.1111/sjoe.12275
Subject(s) - flexibility (engineering) , quality (philosophy) , duopoly , data quality , point (geometry) , business , panel data , mobile marketing , economics , marketing , microeconomics , advertising , econometrics , digital marketing , metric (unit) , philosophy , geometry , mathematics , management , epistemology , cournot competition
We take today's mobile marketing data landscape as a starting point and consider a duopoly model of third‐degree price discrimination in which firms can complement geo‐location information with data on consumer flexibility of varying quality. We show that, depending on consumer heterogeneity, higher‐quality flexibility data affect profits according to three different patterns. In equilibrium, both firms tend to acquire data if the data are of high quality, while only one acquires data if the data quality is low. Firms are likely to gain from additional data if consumers have similar preferences and/or when data are precise. Although social welfare (weakly) improves, consumers can be harmed.