Market Segmentation Through Information

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 which, in turn, compete on price by offering personalised discounts to customers. We provid...

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Bibliographic Details
Published inIDEAS Working Paper Series from RePEc
Main Authors Elliott, M, Galeotti, A, Koh, A
Format Paper
LanguageEnglish
Published St. Louis Federal Reserve Bank of St. Louis 01.01.2021
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Summary: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 which, 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 monopolize all such markets. This condition is surprisingly mild, and suggests room for regulatory oversight.