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Price customization and targeting in matching markets

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  • Renato Gomes
  • Alessandro Pavan

Abstract

We introduce a model of (platform‐mediated) many‐to‐many matching in which agents' preferences are both vertically and horizontally differentiated. We first show how the model can be used to derive the profit‐maximizing matching plans under customized pricing. We then investigate the implications for targeting and welfare of uniform pricing (be it explicitly mandated or induced by privacy regulation), preventing the platform from conditioning prices on agents' profiles. The model can be applied to study ad exchanges, online retailing, and media markets.

Suggested Citation

  • Renato Gomes & Alessandro Pavan, 2024. "Price customization and targeting in matching markets," RAND Journal of Economics, RAND Corporation, vol. 55(2), pages 230-265, June.
    • Handle: RePEc:bla:randje:v:55:y:2024:i:2:p:230-265
    DOI: 10.1111/1756-2171.12464
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    1. Attila Ambrus & Emilio Calvano & Markus Reisinger, 2016. "Either or Both Competition: A "Two-Sided" Theory of Advertising with Overlapping Viewerships," American Economic Journal: Microeconomics, American Economic Association, vol. 8(3), pages 189-222, August.
    2. Johnson, T.R., 2013. "Matching through position auctions," Journal of Economic Theory, Elsevier, vol. 148(4), pages 1700-1713.
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    Cited by:

    1. Alessandro Bonatti & Gonzalo Cisternas, 2020. "Consumer Scores and Price Discrimination," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 87(2), pages 750-791.

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    More about this item

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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