Product Information Provided by Sellers and Platforms

29 Pages Posted: 2 Nov 2021 Last revised: 14 Jul 2022

See all articles by Stefan Terstiege

Stefan Terstiege

Maastricht University - Department of Economics

Cédric Wasser

University of Basel - Faculty of Business and Economics

Date Written: July 14, 2022

Abstract

Sellers and platforms both supply product information, but their motivation differs: because of network effects and regulation, and to collect more user data, platforms often target consumer welfare. We show that in this context a profit-maximizing seller cannot do better than to preemptively choose full disclosure: if the consumers' learning remains incomplete and admits higher profits than full disclosure, the platform can add information that makes consumers better off at the cost of lower seller profits. Our result has implications for regulation and the division of labor in information disclosure by sellers and platforms.

Keywords: information disclosure, Bayesian persuasion, platforms, regulation

JEL Classification: D42, D82, D83, L51

Suggested Citation

Terstiege, Stefan and Wasser, Cédric, Product Information Provided by Sellers and Platforms (July 14, 2022). Available at SSRN: https://ssrn.com/abstract=3951856 or http://dx.doi.org/10.2139/ssrn.3951856

Stefan Terstiege

Maastricht University - Department of Economics ( email )

P.O. Box 616
Maastricht, 6200 MD
Netherlands

Cédric Wasser (Contact Author)

University of Basel - Faculty of Business and Economics ( email )

Peter Merian-Weg 6
Basel, 4002
Switzerland

HOME PAGE: http://www.cedricwasser.net

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