Discriminatory Information Disclosure

We consider a price discrimination problem in which a seller has a single object for sale to a potential buyer. At the time of contracting, the buyer’s private type is his incomplete private information about his value, and the seller can disclose additional private information to the buyer. We study the question of whether discriminatory information disclosure can be profitable to the seller under the assumption that, for the same disclosure policy, the amount of additional private information that the buyer can learn depends on his private type. We establish sufficient conditions under which it is profit-maximizing for the seller to grant each private type of the buyer full access to all additional private information under her control. In general, however, discriminatory disclosure can be optimal, because it reduces the information rent accrued to private types of the buyer without much impact on the trade surplus.