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Faculty of Economics

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Evans, R., Park, I-U.

Third-Party Sale of Information


Abstract: We study design and pricing of information by a monopoly information provider for a buyer in a trading relationship with a seller. The profit-maximizing information structure has a binary threshold character. This structure is inefficient when seller production cost is low. Compared with a situation of no information, the information provider increases welfare if cost is high but reduces it if cost is low. A monopoly provider creates higher welfare than a competitive market in information if the prior distribution of buyer valuations is not too concentrated. Giving the seller a veto over the information contract generates full efficiency.

Keywords: Information Sale, Mechanism Design, Information Design

JEL Codes: D61 D82 D83 L12 L15

Author links: Robert Evans  


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