Competition in Selling Information

A characteristic of many information markets is that consumers can cross-check information, i.e. observe several information sources. To explore this we build a model of market for information where information outlets can only report a coarse signal and face a distribution of consumers with different information preferences. Without cross-checking, outlets are unbiased and minimally differentiated. When cross-checking is allowed, outlets differentiate and the degree of differentiation is increasing in the dispersion of consumer types. Differentiation is detrimental to consumer welfare, and a single monopoly outlet may provide higher consumer welfare than a competitive duopoly