Optimal Information Structures for the Seller of a Search Good

This paper examines an information system design problem faced by the seller of a search good who sells his product in a competitive market to well-informed consumers. The formulation results in a nonlinear optimization problem having a special structure which can be exploited in solving the first-order conditions. Closed-form solutions and comparative statics results are given in the case of a uniformly-distributed attribute, and we provide a numerical example in the case of a normally-distributed attribute.