ESSAY ON ADVERTISING IN DIGITAL PLATFORMS AND THEIR TAXATION

The present work constitutes a first attempt of understanding the digitalization of economy for what concerns platforms, which exploit two sides of market to make profits, by using targeted advertising built on personal “free” data. First, we analyse the nature of targeted advertising. We focus on the impact of ads on well-being of consumers. The possibility of having too much advertising calls for a government fiscal action that can be welfare-enhancing under some circumstances. Moreover, in a context of open economy, the decisions made by a government may spread their effects also abroad. Then, we study in deep how a two-sided platform works. We introduce a new element to the related literature. Users care about their privacy, but they do not know the actual level of their data mining. We deal with two issues: privacy protection and the need for government of raising fiscal revenue. Finally, we enlarge our approach by asking why a government should intervene by changing the market equilibrium. In an optimal taxation framework, we draw a method to address persuasive advertising when “undesired” by the government and show how it mixes with distributional concerns.