Information has three main properties that would seem to cause difficulties for market transactions.

Experience good. You must experience an information good before you know what it is. Response: previewing and browsing; reviews; reputation.

Returns to scale. Information typically has a high fixed cost of production but a low marginal cost of reproduction. Competitive markets tend to push price to marginal cost, which, in the case of information goods, is close to zero. But this leaves no margin to recover those huge fixed costs. How is it that information can be sold at all? The obvious answer is that information is rarely traded on competitive markets. Instead, information goods are highly differentiated.

Public goods. Information goods are typically non-rival and sometimes nonexcludable. Information goods are inherently nonrival, due to the tiny cost of reproduction. However, whether they are excludable or not depends on the legal regime.

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