When Public Information Helps Consumers
arXiv:2601.04942
The paper analyzes when public disclosure of information raises consumer surplus in a monopoly setting, showing it occurs if a weighted combination of the slope and curvature of Myerson's virtual type is non‑negative, with convex virtual types guaranteeing a benefit.
Abstract
Does more information benefit consumers when a monopolist can adjust its price? Although information helps consumers evaluate a product, Schlee (1996) showed that public disclosure can reduce consumer surplus. We characterize exactly when the opposite occurs. More informative disclosure increases consumer surplus if and only if a weighted combination of the slope and curvature of Myerson's virtual type is nonnegative. Producer surplus always increases, while a weaker condition characterizes when total surplus increases. In particular, information benefits consumers whenever the virtual type is convex. Even when convexity fails, the same conclusion holds if monopoly output is sufficiently small.