Rabano, Alejandro
Contact Information
Available for interviews at
European Job Market for Economists (EEA)
Allied Social Science Associations (ASSA)
CV Job Market Paper
Research Interests
Macroeconomics, Digital Economy, Climate Change, Firm Dynamics
Placement Officer
Edouard Schaal
[email protected]
References
Isaac Baley (Advisor)
[email protected]
Edouard Schaal (Advisor)
[email protected]
Jaume Ventura
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Andrea Caggese
[email protected]
Research
Data, Targeted Advertising and Consumer Welfare (Job Market Paper)
Abstract: Which firms and consumers benefit from the increasing use of data for targeted advertising? This paper develops a model of search frictions in product markets where heterogeneous firms use data to target different consumers. Firms endogenously adopt Big Data technologies that lower the cost of targeting. Using firm-level balance sheet data combined with a technology survey for France, I show that firms analyzing Big Data from social media (i) use it for advertising, (ii) are larger, (iii) are more productive, and (iv) face higher fixed costs. I calibrate the model to France in the late 2010s and show that it replicates the positive correlation between Big Data use, firm size, and fixed costs. The model implies that a technological improvement increasing the availability of consumer data benefits only large firms, which allocate more resources to fixed targeting costs, and shifts consumption toward high-valuation consumers. The equilibrium is inefficient and expenditure in targeting is excessive because firms do not internalize that targeting high-valuation consumers crowds out competitors from reaching them. Welfare in the competitive equilibrium rises with a digital advertising tax, which reduces the intensive use of targeted advertising by large firms. Finally, I use the model to evaluate the aggregate effects of lifting the GDPR. Relaxing consumer data regulation would encourage Big Data adoption but increase firm concentration.