This paper examines the pricing and welfare implications of data as a factor of production with a stylized economic model. We introduce a generalized framework that specifies two types of data: 1) public data pricing, which maximizes social welfare, and 2) commercial data pricing, which maximizes the profit. The model reveals two takeaways: first, two prices may converge in the data economy. It is due to that data come from citizens and may be used to create value back to them. Therefore, a profit- seeking data seller might find it optimal to extend the user base, which is in line with the interest of the welfare maximizer. Second, the pricing gap between optimal prices does not change monotonically with the improvement of data quality. These findings shed new light on the current and future of data product operations, particularly in the understudied public sectors.
Wang, Jinzhao; Dou, Yifan; Huang, Lihua; Zhang, Xiaoyang; and Tang, Qifeng, "Selling the Data Product: Pricing Strategies and Welfare Implications" (2023). PACIS 2023 Proceedings. 106.
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