This paper contains a theoretical exploration of the potential effects of an information-supplying activist on a market for credence goods. Using a non-cooperative game-theoretic model with incomplete information, we find that such an activist can alter the decisions of firms and consumers. In our model, when an activist alters the decisions of firms and consumers, the social welfare of market exchange is enhanced. We also find that an activist can support a strategy in which a firm differentiates its product on some credence characteristic even though this characteristic remains unknown to the consumer both prior and subsequent to consumption. In general, our analysis has several implications for the study of private collective action in markets.

Key words: Information economics, industrial organization, and collective action