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Market Segmentation and Product Steering

Author

Listed:
  • Stefan Terstiege
  • Adrien Vigier

Abstract

A monopolistic seller possesses an inventory containing distinct products, each consumer wishes to buy a single product, and the seller can steer consumers' choices. We fully characterize the producer-consumer surplus pairs induced by market segmentation when the number of products is large. The same characterization holds if the seller cannot price discriminate. We also investigate the relationship between consumer surplus, social welfare, and consumer privacy. Along the Pareto frontier, points with greater consumer surplus can be reached by market segmentations that afford more privacy.

Suggested Citation

  • Stefan Terstiege & Adrien Vigier, 2025. "Market Segmentation and Product Steering," American Economic Journal: Microeconomics, American Economic Association, vol. 17(4), pages 126-146, November.
    • Handle: RePEc:aea:aejmic:v:17:y:2025:i:4:p:126-46
    DOI: 10.1257/mic.20240078
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    References listed on IDEAS

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    1. Charalambos D. Aliprantis & Kim C. Border, 2006. "Infinite Dimensional Analysis," Springer Books, Springer, edition 0, number 978-3-540-29587-7, January.
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    More about this item

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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