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Data Provision to an Informed Seller

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  • Shota Ichihashi
  • Alex Smolin

Abstract

A monopoly seller is privately and imperfectly informed about the buyer's value of the product. The seller uses information to price discriminate the buyer. A designer offers a mechanism that provides the seller with additional information based on the seller's report about her type. We establish the impossibility of screening for welfare purposes, i.e., the designer can attain any implementable combination of buyer surplus and seller profit by providing the same signal to all seller types. We use this result to characterize the set of implementable welfare outcomes, study the seller's incentive to acquire third-party data, and demonstrate the trade-off between buyer surplus and efficiency.

Suggested Citation

  • Shota Ichihashi & Alex Smolin, 2022. "Data Provision to an Informed Seller," Papers 2204.08723, arXiv.org, revised Mar 2023.
    • Handle: RePEc:arx:papers:2204.08723
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    References listed on IDEAS

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    1. Xianwen Shi & Jun Zhang, 2020. "Welfare of Price Discrimination and Market Segmentation in Duopoly," Working Papers tecipa-682, University of Toronto, Department of Economics.
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    Cited by:

    1. Andrew Rhodes & Jidong Zhou, 2022. "Personalized Pricing and Competition," Cowles Foundation Discussion Papers 2329, Cowles Foundation for Research in Economics, Yale University.
    2. Strausz, Roland, 2022. "Correlation-Savvy Sellers," Rationality and Competition Discussion Paper Series 347, CRC TRR 190 Rationality and Competition.

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    More about this item

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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