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Faculty of Economics

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Elliott, M., Galeotti., A. and Koh., A.

Market Segmentation Through Information

CWPE2105

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 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.

Keywords: Information design, market segmentation, price discrimination

JEL Codes: D43 D83 L13

Author links: Matthew Elliott  

PDF: https://www.econ.cam.ac.uk/research-files/repec/cam/pdf/cwpe2105.pdf

Open Access Link: https://doi.org/10.17863/CAM.65424