  We study the effects of data sharing between firms on prices, profits, and
consumer welfare. Although indiscriminate sharing of consumer data decreases
firm profits due to the subsequent increase in competition, selective sharing
can be beneficial. We show that there are data-sharing mechanisms that are
strictly Pareto-improving, simultaneously increasing firm profits and consumer
welfare. Within the class of Pareto-improving mechanisms, we identify one that
maximizes firm profits and one that maximizes consumer welfare.
