Abstract
This paper introduces a simple model of contemporary information markets: Consumers prefer high-quality information, judiciously sharing stories and posts. High-quality stories are costly to produce, and overall quality is endogenous. When suppliers' payoffs derive from how many consumers view their stories, quality is highest when social connectedness is neither too high nor too low. Third-party misinformation can increase high-quality output, since consumers share more judiciously. In highly-connected markets, low-quality stories are widely seen and dominate. However, when suppliers' payoffs derive solely on consumer actions (e.g, votes or purchases) based on their stories and consumers are highly connected, consumers perfectly infer quality and quality is highest.