Understanding the economics of information sharing

Summary

Conditional to context, information-sharing within markets can be welfare improver or welfare reducer, while can also show pro-competitive or anti-competitive features. Overall, expected effects in efficiency and competition will depend on the nature of competition and the type of uncertainty

Key points

• Key points:
• Information is defined as what could be infer by data, and so the latter could be valuable (informative) or not (non-informative, noise)
• In dynamic settings, information-sharing could facilitate collusion. Antitrust policy is aware and takes both soft and hard evidence to assess effects of data-sharing agreements among rival firms
• Digital platforms could challenge conventional wisdom regarding competition effects of information-sharing, especially when trying to foster competition “for” the market and innovation efforts…
• …but privacy and data security costs need to be weighted when dealing with individuals personal data
• Knowledge from the economics of information-sharing remains suitable to understand effects on competition “in” the market, but artificial intelligence and colluding algorithms rise further challenges to antitrust policy

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