Selling information to competitive firms.
Abstract: Internal agency conflicts distort firms' choices and reduce social welfare. To limit these distortions, principals dealing with privately informed agents often acquire information from specialized intermediaries, such as auditing and certification companies, that are able to ascertain, and...
| Published in: | RAND Journal of Economics (Wiley-Blackwell) Vol. 49; no. 1; pp. 254 - 283 |
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| Main Authors: | , , |
| Format: | Article |
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Wiley-Blackwell
Spring2018
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| Subjects: | |
| Online Access: | View this record in EBSCOhost |
| fields | @attributes: recordID: 1 pdfLink: plink: https://search.ebscohost.com/login.aspx?direct=true&db=ssf&AN=127932166&site=ehost-live header: @attributes: shortDbName: ssf uiTerm: 127932166 longDbName: Social Sciences Full Text (H.W. Wilson) uiTag: AN controlInfo: bkinfo: jinfo: jid: 07416261 56RJ jtl: RAND Journal of Economics (Wiley-Blackwell) issn: 07416261 maglogo: Y pubinfo: dt: Spring2018 vid: 49 iid: 1 pid: 480 pub: Wiley-Blackwell artinfo: ui: 127932166 10.1111/1756-2171.12226 ppf: 254 ppct: 29 formats: fmt: – @attributes: type: T – @attributes: type: P size: 450KB tig: atl: Selling information to competitive firms. aug: au: Kastl, Jakub Pagnozzi, Marco Piccolo, Salvatore affil: Princeton University, CEPR, and NBER Università di Napoli Federico II and CSEF Università di Bergamo and CSEF su: Social services Economic equilibrium Economic demand Aggregate demand Willingness to pay sug: subj: Social services Economic equilibrium Economic demand Other Individual and Family Services Aggregate demand Willingness to pay ab: Abstract: Internal agency conflicts distort firms' choices and reduce social welfare. To limit these distortions, principals dealing with privately informed agents often acquire information from specialized intermediaries, such as auditing and certification companies, that are able to ascertain, and credibly disclose, agents' private information. We study how the structures of both the information provision and the final good markets affect information accuracy. A monopolistic information provider may supply imprecise information to perfectly competitive firms, even if the precision of this information can be increased at no cost. This is due to a price effect of information: although more accurate information reduces agency costs and allows firms to increase production, it also results in a lower price in the final good market, which reduces principals' willingness to pay for information. pubtype: Academic Journal doctype: Article src: R language: English refInfo: copyright: @attributes: flag: N holdings: @attributes: islocal: N |
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