Competing data intermediaries

I study a model of competition between data intermediaries, which collect personal data from consumers and sell them to downstream firms. Competition has a limited impact on benefiting consumers: If intermediaries offer high compensation for data, consumers share data with multiple intermediaries, which lowers the downstream price of data and hurts intermediaries. Anticipating this, intermediaries offer low compensation for data. Although consumers are exclusive suppliers of data, the nonrivalry of data can lead to concentration and high intermediary profits in data markets. In particular, if downstream firms use data to extract surplus from consumers, competing intermediaries sustain a monopoly outcome.

Automated summary

Competition between data intermediaries for consumer data has limited benefits for consumers, as high compensation leads to data sharing with multiple intermediaries. Nonrivalry of data can result in market concentration and high profits for intermediaries, especially when downstream firms exploit data to extract surplus value from consumers. A monopoly outcome can be sustained by competing intermediaries in such scenarios.