Price Customization and Targeting in Matching Markets

Renato Gomes and Alessandro Pavan

No 12936, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We investigate the effects on targeting and welfare of uniform pricing (be it explicitly mandated, induced by privacy regulations, or the result of the transition from a centralized to a decentralized market structure). We build a model of many-to-many matching in which preferences are both vertically and horizontally differentiated. In the absence of uniform-price obligations, platforms maximize profits through price customization, using information on local elasticities. We show how uniform pricing may either increase or decrease targeting, and identify conditions under which it is beneficial to consumer surplus. The analysis has implications for online retailing, ad exchanges, and media markets

Keywords: Many-to-many matching; Asymmetric information; Platforms; Incentives; Price discrimination (search for similar items in EconPapers)
JEL-codes: D82 (search for similar items in EconPapers)
Date: 2019-03
New Economics Papers: this item is included in nep-com, nep-des, nep-gth and nep-pay
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Journal Article: Price customization and targeting in matching markets (2024)
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