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Title: Data, Competition, and Digital Platforms
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. (JEL D11, D42, D44, D82, D83, M37)  more » « less
Award ID(s):
1948336 1948692
PAR ID:
10554634
Author(s) / Creator(s):
;
Publisher / Repository:
American Economic Association
Date Published:
Journal Name:
American Economic Review
Volume:
114
Issue:
8
ISSN:
0002-8282
Page Range / eLocation ID:
2553 to 2595
Format(s):
Medium: X
Sponsoring Org:
National Science Foundation
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