American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Data, Competition, and Digital Platforms
American Economic Review
vol. 114,
no. 8, August 2024
(pp. 2553–95)
Abstract
A monopolist platform uses data to match heterogeneous consumers with multiproduct sellers. The consumers can purchase the products on the platform or search off the platform. The platform sells targeted ads to sellers that recommend their products to consumers and reveals information to consumers about their match values. The revenue-optimal mechanism is a managed advertising campaign that matches products and preferences efficiently. In equilibrium, sellers offer higher qualities at lower unit prices on than off platform. The platform exploits its information advantage to increase its bargaining power vis-à-vis the sellers. Finally, privacy-respecting data-governance rules can lead to welfare gains for consumers.Citation
Bergemann, Dirk, and Alessandro Bonatti. 2024. "Data, Competition, and Digital Platforms." American Economic Review, 114 (8): 2553–95. DOI: 10.1257/aer.20230478Additional Materials
JEL Classification
- D11 Consumer Economics: Theory
- D42 Market Structure, Pricing, and Design: Monopoly
- D44 Auctions
- D82 Asymmetric and Private Information; Mechanism Design
- D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
- M37 Advertising