Authors(Speaker): Alessandro Bonatti (MIT)
Alessandro Bonatti is the John Norris Maguire (1960) Professor and an Associate Professor of Applied Economics at the MIT Sloan School of Management, and a Fellow of Luohan Academy. His research studies the impact of information technology on firms’ online advertising and pricing strategies, as well as on consumer welfare. His most recent work explores the role of data intermediaries with market power (e.g., large Internet platforms): how they collect, mine, and monetize information. He has also studied the optimal provision of incentives in research-intensive and creative industries, and the resolution of conflict inside standard-setting organizations. In addition to teaching, Dr. Bonatti serves as Editor of the Journal of Industrial Economics, and Associate Editor of the American Economic Journal: Microeconomics, the Rand Journal of Economics, and the Journal of the European Economic Association. Dr. Bonatti holds a PhD in economics from Yale University.
Recap:
Along with the rise of E-Commerce, a growing fraction of retail has been shifted online. The digital platform allows efficient matching and coordination among sellers and buyers, which contributes significantly to social welfare. One advantage of platform as a marketplace is that it can use big data to facilitate transaction. However, such practices also generate concerns over consumer privacy and market power of platform companies. A key question in this debate is how does such practice affect the creation of surplus and its sharing between consumers, sellers and the platform? How do different data-governance rules matter?
On March 8, 2022, Professor Alessandro Bonatti from MIT joined us in the Luohan Webinar to present a comprehensive model of digital commerce and evaluate how different data-governance rules affect the creation and sharing of the social surplus.
The model features a digital platform which enables matching of consumers and advertisers online. Each consumer has heterogenous preferences across heterogeneous advertisers. The advertisers can tailor their products to the preferences of the consumer. Each consumer can access each seller's products online or offline. The platform can improve the quality of the matches through its past and present data collection. The platform monetizes its services by digital advertising that are sold in (generalized) second-price auctions.
In such an environment, they derive the equilibrium surplus sharing between consumers, advertisers and the platform. Consumer's information rents come from off-platform channel, where off-platform demand disciplines price level on-platform. The growth of a platform's database influences each consumer's outside option and leads to higher prices. When platform sell exclusive access to consumers, a large number of sellers generates higher average realized match values, but not higher consumer surplus. Finally, the rules by which a platform shares its data affect the product design and price decisions.
The webinar attracts more than 160 participants worldwide. Many researchers within the Luohan Community joined and interacted with the speakers, including Steve Tadelis (Berkeley), Markus Brunnermeier (Princeton), Laura Veldkamp (NYU), Liyan Yang (Toronto), Shangjin Wei (Columbia), Kose John (NYU), Itay Fainmesser (JHU).
If you would like to
give a presentation in a future webinar, contact our Senior Economist Dr. Wen
Chen (wen.chen@luohanacademy.com). For
other inquiries, please contact: events@luohanacademy.com.