Market Segmentation Through Information

32 Pages Posted: 8 Aug 2019 Last revised: 31 Jan 2022

See all articles by Matthew Elliott

Matthew Elliott

University of Cambridge

Andrea Galeotti

London Business School

Andrew Koh

University of Cambridge

Wenhao Li

Pennsylvania State University

Date Written: December 13, 2021

Abstract

An information designer has precise information about consumers' preferences over products sold by oligopolists. The designer chooses what information to reveal to differentiated frms who, then, compete on price by making personalized offers. We ask what market outcomes the designer can achieve. The information designer is a metaphor for an internet platform who collects data about users and sells it to firms who can, in turn, target discounts and promotions towards different consumers. Our analysis provides new benchmarks demonstrating the power that users' data can endow internet platforms with. These benchmarks speak directly to current regulatory debates.

Keywords: Pirce discriminition, market segmentation, information design

Suggested Citation

Elliott, Matthew and Galeotti, Andrea and Koh, Andrew and Li, Wenhao, Market Segmentation Through Information (December 13, 2021). Available at SSRN: https://ssrn.com/abstract=3432315 or http://dx.doi.org/10.2139/ssrn.3432315

Matthew Elliott (Contact Author)

University of Cambridge ( email )

Trinity Ln
Cambridge, CB2 1TN
United Kingdom

Andrea Galeotti

London Business School ( email )

Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom

Andrew Koh

University of Cambridge ( email )

Trinity Ln
Cambridge, CB2 1TN
United Kingdom

Wenhao Li

Pennsylvania State University ( email )

University Park
State College, PA 16802
United States

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