Dirk Bergemann Publications

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.

A data intermediary acquires signals from individual consumers regarding their preferences. The intermediary resells the information in a product market wherein firms and consumers tailor their choices to the demand data. The social dimension of the individual data—whereby a consumer’s data are predictive of others’ behavior—generates a data externality that can reduce the intermediary’s cost of acquiring the information. The intermediary optimally preserves the privacy of consumers’ identities if and only if doing so increases social surplus. This policy enables the intermediary to capture the total value of the information as the number of consumers becomes large.