Good Data and Bad Data: The Welfare Effects of Price Discrimination
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arXiv
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| Auteurs principaux: | , , |
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| Format: | Preprint |
| Publié: |
2025
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| _version_ | 1866909911757094912 |
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| author | Farboodi, Maryam Haghpanah, Nima Shourideh, Ali |
| author_facet | Farboodi, Maryam Haghpanah, Nima Shourideh, Ali |
| contents | We study how a monopolist's use of consumer data for price discrimination affects welfare. To answer this question, we develop a model of market segmentation subject to residual uncertainty. We fully characterize when data usage monotonically increases or decreases welfare or when the effect is non-monotone. The characterization reduces the problem to one with only two demand curves, and gives a condition for the two-demand-curves case that highlights that information affects welfare in three distinct ways. In the non-monotone case, we provide tight bounds on the welfare effects of information and identify the best local direction for providing additional information. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2502_03641 |
| institution | arXiv |
| publishDate | 2025 |
| record_format | arxiv |
| spellingShingle | Good Data and Bad Data: The Welfare Effects of Price Discrimination Farboodi, Maryam Haghpanah, Nima Shourideh, Ali Theoretical Economics We study how a monopolist's use of consumer data for price discrimination affects welfare. To answer this question, we develop a model of market segmentation subject to residual uncertainty. We fully characterize when data usage monotonically increases or decreases welfare or when the effect is non-monotone. The characterization reduces the problem to one with only two demand curves, and gives a condition for the two-demand-curves case that highlights that information affects welfare in three distinct ways. In the non-monotone case, we provide tight bounds on the welfare effects of information and identify the best local direction for providing additional information. |
| title | Good Data and Bad Data: The Welfare Effects of Price Discrimination |
| topic | Theoretical Economics |
| url | https://arxiv.org/abs/2502.03641 |