Market Segmentation Through Information
32 Pages Posted: 8 Aug 2019 Last revised: 31 Jan 2022
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
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