Market Segmentation Through Information

20 Pages Posted: 8 Aug 2019

See all articles by Matthew Elliott

Matthew Elliott

Cambridge University

Andrea Galeotti

London Business School

Date Written: August 5, 2019

Abstract

Prodigious amounts of data are being collected by internet companies about their users' preferences. We consider the information design problem of how to share this information with traditional companies that, in turn, compete on price by offering personalised discounts to customers. We provide a necessary and sufficient condition under which the internet company is able to perfectly segment and monopolise all such markets. Although the information design required to achieve this can be complicated, we also show that a simple and intuitive design often suffices.

Keywords: Pirce discriminition, market segmentation, information design

Suggested Citation

Elliott, Matthew and Galeotti, Andrea, Market Segmentation Through Information (August 5, 2019). Available at SSRN: https://ssrn.com/abstract=3432315 or http://dx.doi.org/10.2139/ssrn.3432315

Matthew Elliott (Contact Author)

Cambridge University ( email )

Faculty of Economics
Austin Robinson Building Sidgwick Avenue
Cambridge, CB39DD
United Kingdom

Andrea Galeotti

London Business School ( email )

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

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
69
Abstract Views
312
rank
364,497
PlumX Metrics