Strategic data sales with partial segment profiling

We analyse the incentives of a data broker to sell consumer-level data that enable personalised pricing to compete with firms when only a fraction of consumers — centred around one firm that we label “central” — are profiled. The central firm can potentially benefit from the data more than the rival ones (“peripheral”). We show that the data broker may decide not to sell the dataset to the central firm and instead trade with its peripheral competitors. In particular, we identify a strategic reaction of competitors that want to prevent that data increase competition. • Analysis of the data broker's incentives to sell partial consumer data to market competitors. • Analysis of the firms' incentives to use consumer data. • Effects of data driven price discrimination on competition outcome and welfare. • The data broker sells to peripheral firms that do not benefit the most from it. • The peripheral firms can preempt the central one from gaining competitive advantage.