42 Pages Posted: 9 Sep 2014
Date Written: September 8, 2014
We propose a model of data provision and data pricing. A single data provider controls a large database that contains information about the match value between individual consumers and individual firms (advertisers). Advertisers seek to tailor their spending to the individual match value. The data provider prices queries about individual consumers' characteristics (cookies). We determine the equilibrium data acquisition and pricing policies. Advertisers choose positive and/or negative targeting policies. The optimal query price influences the composition of the targeted set. The price of data decreases with the reach of the database and increases with the fragmentation of data sales.
Keywords: Data providers, Data pricing, Selling information, Targeting, Online advertising, Cookies, Media markets
JEL Classification: D44, D82, D83
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