Information intermediaries and optimal information distribution

Information intermediaries collect, organize, and distribute information to their clients. This study examines three institutional forms of information intermediary: the for-profit firm, the nonprofit organization, and the government agency. Using results from the economics and information science literature, five tests are proposed that characterize particular information markets. For a given information market, these characteristics determine the institutional form of information intermediary that will maximize the total social and private benefit from information consumption. Although many kinds of information can be effectively delivered by for-profit information intermediaries, socially beneficial information often requires subsidized provision from government or nonprofit intermediaries in order to encourage consumption up to socially optimal levels. Applications to current topics in information distribution are also discussed. D 2002 Elsevier Science Inc. All rights reserved.