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Selling Cookies

Dirk Bergemann () and Alessandro Bonatti ()

No 1920, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: We develop a model of data pricing and targeted advertising. A monopolistic data provider determines the price to access "cookies," i.e., informative signals about individual consumers' preferences. The demand for information is generated by advertisers who seek to tailor their spending to the value of each consumer. We characterize the set of consumers targeted by the advertisers and the optimal monopoly price of cookies. The ability to influence the composition of the set of targeted consumers provides incentives to lower prices. Thus, the monopoly price of data is decreasing in the reach of the database and increasing in the number of competing sellers of exclusive data. Finally, we explore the implications of nonlinear pricing of information and characterize the exclusive data sales that emerge as part of the optimal mechanism.

Keywords: Data providers; Information sales; Targeting; Online advertising; Media markets (search for similar items in EconPapers)
JEL-codes: D44 D82 D83 (search for similar items in EconPapers)
Pages: 49 pages
Date: 2013-10
New Economics Papers: this item is included in nep-com, nep-mic and nep-mkt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

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http://cowles.yale.edu/sites/default/files/files/pub/d19/d1920.pdf (application/pdf)

Related works:
Journal Article: Selling Cookies (2015) Downloads
Working Paper: Selling Cookies (2014) Downloads
Working Paper: Selling Cookies (2014) Downloads
Working Paper: Selling Cookies (2013) Downloads
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