In a sequential-search market, total surplus reaches the full-information level with more buyers only if a signal can fully reveal good quality; otherwise it collapses to the no-information level, and better-informed buyers reduce surplus unless adverse selection is irrelevant.
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The (Mis)use of Information in Decentralised Markets
In a sequential-search market, total surplus reaches the full-information level with more buyers only if a signal can fully reveal good quality; otherwise it collapses to the no-information level, and better-informed buyers reduce surplus unless adverse selection is irrelevant.