Market Segmentation Through Information
20 Pages Posted: 8 Aug 2019
Date Written: August 5, 2019
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
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