Selling information for bilateral trade

Robert Evans () and In-Uck Park ()
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Robert Evans: Department of Economics, Cambridge University
In-Uck Park: Department of Economics, University of Bristol

Theoretical Economics, Forthcoming

Abstract: We study the design and pricing of information by independent information providers for a buyer engaged in a trading relationship with a seller, and examine their welfare implications. While competitive information firms would sell full information about the value of the good, a monopolist supplies limited information in a particularly simple form---often resulting in higher total surplus than under full information, by influencing the seller's pricing decision. If only a single information structure can be offered, it takes a binary threshold form. If the provider can offer a menu of priced information structures before the seller sets a price, he offers a continuum of thresholds, inducing a unit-elastic demand function for the seller. In both scenarios, the information firm increases total welfare when the seller's production cost is high but reduces it when the cost is low.

Keywords: Information sale; mechanism design; information design (search for similar items in EconPapers)
JEL-codes: D42 D61 D82 D83 L15 (search for similar items in EconPapers)
Date: 2026-06-30
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