CRM and Incentives to Sharing Customer Information with Competitors

Abstract

The exchange of information among competing firms has long been an important issue for researchers and antitrust authorities. There have been many studies that investigate firms' economic incentive to share their private information about market conditions with competitors and the effect of information sharing on social welfare (Gal-Or 1985; Shapiro 1986). Now with much more mature IT, especially CRM application, it is much easier for firms to collect and organize detailed information – even about each customer. This study investigates whether firms have any incentive to share their customer information with rivals, and what the effect might be of such information sharing on social welfare and consumer surplus with a game-theoretic model of duopoly.