The social value of information on product quality

•Firms have private information on product quality.•Revelation of information does not have social value in a baseline model.•It does have social value under two alternative models.•In those cases, the gross social value increases in fineness of information.•This helps ground the large literature on signaling, liability, certification, etc.

In the context of a seller with private information about product quality, I show that revelation of information on product quality is sometimes, but not always, socially valuable. When it is socially valuable, there is generally a tradeoff between the acquisition and revelation of finer, but more costly information and the revelation of coarser, but less costly information. As a result, it can be socially optimal for firms to reveal only coarse private information.