"I recognized that information was, in many respects, like a public good, and it was this insight that made it clear to me that it was unlikely that the private market would provide efficient resource allocations whenever information was endogenous"
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Stiglitz is doing something deceptively radical here: taking the soft, squishy stuff of “information” and treating it like roads or clean air, the kind of thing everyone relies on but no one firm can fully own. That move quietly detonates a big chunk of free-market confidence. If information is a public good, then markets don’t just occasionally fail around the edges; they misfire at the core, because the very thing prices are supposed to coordinate is itself costly to produce, easy to copy, and often valuable precisely when others don’t have it.
The key word is endogenous. Stiglitz isn’t talking about information as a fixed background condition, like a weather report handed down by God. He’s talking about information as something generated by economic activity and incentives: firms decide whether to research, disclose, obfuscate, or exploit asymmetries. Once information is produced within the market, it becomes strategic. Companies underinvest in it because they can’t capture all the benefits; they also hoard it because advantage comes from others’ ignorance. Either way, the “efficient allocation” story starts sounding like a fairy tale told by people who assume away inconvenient reality.
Context matters: this is Stiglitz the Nobel laureate staking out the intellectual terrain of information economics, a critique of the tidy textbook model where perfect information is the silent prerequisite. The subtext is a rebuke to laissez-faire as default policy. If information behaves like a public good, then regulation, disclosure rules, public research, and institutional design aren’t distortions. They’re the missing infrastructure markets need to function without systematically rewarding secrecy, manipulation, and preventable crises.
The key word is endogenous. Stiglitz isn’t talking about information as a fixed background condition, like a weather report handed down by God. He’s talking about information as something generated by economic activity and incentives: firms decide whether to research, disclose, obfuscate, or exploit asymmetries. Once information is produced within the market, it becomes strategic. Companies underinvest in it because they can’t capture all the benefits; they also hoard it because advantage comes from others’ ignorance. Either way, the “efficient allocation” story starts sounding like a fairy tale told by people who assume away inconvenient reality.
Context matters: this is Stiglitz the Nobel laureate staking out the intellectual terrain of information economics, a critique of the tidy textbook model where perfect information is the silent prerequisite. The subtext is a rebuke to laissez-faire as default policy. If information behaves like a public good, then regulation, disclosure rules, public research, and institutional design aren’t distortions. They’re the missing infrastructure markets need to function without systematically rewarding secrecy, manipulation, and preventable crises.
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| Topic | Knowledge |
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