Contestable markets and price discrimination in data-driven businesses

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Massimiliano Nuccio
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September 2017

“Data is the new oil” claimed the marketing guru Clive Humby back in 20061 and since then this mantra has been obsessively relaunched by academics, practitioners and policy makers. Although most of them are quite confident about the disruptive effect of data on our economies and societies, it seems we are just at the beginning of a paradigmatic change, yet uncertain of its direction and consequences.
From an economic perspective, information has been considered a major asset for a long time and a necessary assumption to allow markets to function properly. To what extent the exponential growth in data production will improve economic performances and, above all, generate benefits to firms and consumers? Are predicted benefits equally distributed or some players may take advantage of data and exploit new forms of market power?
The emergence of the Internet of Things (IoT) has raised compelling issues on the control of data flows in the human-machine relationship. We claim that the combination of a focused regulation to create a real market for data and the high innovative potential in business models can avoid monopolistic control and entry barriers to many of the rising data-driven markets.