Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/176704
Authors: 
Baye, Irina
Reiz, Tim
Sapi, Geza
Year of Publication: 
2018
Series/Report no.: 
DICE Discussion Paper 285
Abstract: 
We focus on four important features of mobile targeting. First, consumers' real-time locations are known to sellers. Second, location is not the only factor determining how responsive consumers are to discounts. Other factors such as age, income and occupation play a role, which are imperfectly observable to marketers. Third, sellers may infer consumer responsiveness from their past purchases. Fourth, firms can deliver personalized offers to consumers through mobile devices based on both their real-time locations and previous purchase behavior. We derive conditions that determine how combining behavior-based marketing with mobile geo-targeting influences profits and welfare in a competitive environment. Our setting nests some earlier models of behavior-based price discrimination as special cases and yields additional insights. For instance, different from previous studies we show that pro.t and welfare effects of behavioral targeting may depend on firm discount factor.
Subjects: 
Mobile Marketing
Location Targeting
Price Discrimination
Customer Data
JEL: 
D43
L13
L15
M37
ISBN: 
978-3-86304-284-4
Document Type: 
Working Paper

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