Contracting in a Market with Differential Information
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10842_2020_350_ReferencePDF.pdf
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512.83 KB
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26157aad8f4eb7afe3f0f0f4e28a96ab
Author(s)
Rocha, Marta
Greve, Thomas R.
Date Issued
November 2020
Publisher
Springer US
Citation
Rocha, Marta and Greve, Thomas R. 2020. "Contracting in a Market with Differential Information."
Version
Author's final manuscript
Abstract
Today’s technology allows firms to collect, store and use different types of data. This has prompted a wide discussion on the effects of access to data on competition and consumer welfare. This discussion has also been present in the energy sector in which advanced technology has allowed for the collection of detailed energy consumption data. Prompted by this discussion on the energy sector, this paper studies an industry where two firms have access to the same technology and compete in prices, but one of them has access to better information about customers. The better informed firm obtains a customer contact advantage, whereas the uninformed firm can still offer a menu of prices without being able to pre-identify the customers. We show that the better informed firm is able to exclude the uninformed firm from the market. This result provides policy insights on the usefulness of considering data access models that can ensure non-discriminatory behaviour.
MIT Department
MIT Center for Energy and Environmental Policy Research
Terms of Use
Article is made available in accordance with the publisher's policy and may be subject to US copyright law. Please refer to the publisher's site for terms of use.
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DOI of Published Version
https://doi.org/10.1007/s10842-020-00350-4
