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Market Segmentation Through Information

Author

Listed:
  • Elliott, M.
  • Galeotti., A.
  • Koh., A.
  • Li, W.

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.

Suggested Citation

  • Elliott, M. & Galeotti., A. & Koh., A. & Li, W., 2021. "Market Segmentation Through Information," Janeway Institute Working Papers 2114, Faculty of Economics, University of Cambridge.
    • Handle: RePEc:cam:camjip:2114
    Note: mle30
    as

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    File URL: https://www.janeway.econ.cam.ac.uk/working-paper-pdfs/jiwp2114.pdf
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    References listed on IDEAS

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    Cited by:

    1. Pak Hung Au & Mark Whitmeyer, 2024. "Attraction Via Prices and Information," Papers 2402.11754, arXiv.org.

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    More about this item

    Keywords

    Information design; market segmentation; price discrimination;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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