Market Segmentation Through Information

Matthew Elliott, Andrea Galeotti, Andrew Koh and Wenhao Li

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: We explore the power that precise information about consumers' preferences grants an intermediary in shaping competition. We think of an intermediary as an information designer who chooses what information to reveal to firms, which then compete `a la Bertrand in a differentiated product market. We characterize the information designs that maximize consumer and producer surplus, showing how information can be used to segment markets to intensify or soften competition. We also show how the power of the intermediary is further enhanced when it has some control over which products consumers are aware of.

Keywords: Information design; market segmentation; price discrimination (search for similar items in EconPapers)
JEL-codes: D43 D83 L13 (search for similar items in EconPapers)
Date: 2021-01-14
New Economics Papers: this item is included in nep-com, nep-cwa, nep-ind and nep-mic
Note: mle30
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Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:2105

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