Connecting the Dots: Markets for Data

Abstract: We develop an intuitive, graph-theoretical approach to analyze markets for data. Our main focus is on complement-substitute relationships between different types of data, and how they interact with questions of competition and market concentration. We examine how the structure of data ownership, as well as the completeness of datasets, determines whether efficient market equilibria exist. Incentives to collect or create data are usually increasing in how much data someone has, creating conditions for market (and surplus) concentration. In sufficiently interconnected data markets, the question "who competes with whom" is non-trivial but determines pricing and surplus allocation.