Reselling Information

TL;DR

This paper analyzes how resale impacts decentralized information markets, revealing that resale can enable sellers to extract maximum payoffs even when resale is restricted, through prepay equilibria.

Contribution

It introduces the concept of prepay equilibrium in information resale markets, showing how resale possibilities influence seller payoffs and market dynamics.

Findings

Resale limits seller revenue to at most one buyer in monopolist scenarios.

Prepay equilibria allow sellers to extract payments from all buyers before information release.

Resale possibilities can equalize seller payoffs with or without resale restrictions.

Abstract

Information is replicable in that it can be simultaneously consumed and sold to others. We study how resale affects a decentralized market for information. We show that even if the initial seller is an informational monopolist, she captures non-trivial rents from at most a single buyer: her payoffs converge to 0 as soon as a single buyer has bought information. By contrast, if the seller can also sell valueless tokens, there exists a ``prepay equilibrium'' where payment is extracted from all buyers before the information good is released. By exploiting resale possibilities, this prepay equilibrium gives the seller as high a payoff as she would achieve if resale were prohibited.