  We study the costs and benefits of selling data to a competitor. Although
selling all consumers' data may decrease total firm profits, there exist other
selling mechanisms -- in which only some consumers' data is sold -- that render
both firms better off. We identify the profit-maximizing mechanism, and show
that the benefit to firms comes at a cost to consumers. We then construct
Pareto-improving mechanisms, in which each consumers' welfare, as well as both
firms' profits, increase. Finally, we show that consumer opt-in can serve as an
instrument to induce firms to choose a Pareto-improving mechanism over a
profit-maximizing one.
