Subsidies make sense, but could they run into a tragedy-of-the-commons scenario? For instance, if a group of businesses want to forecast something, they could pool their money to subsidize a prediction market. But there would be incentive to defect by not contributing to the pool, and getting the same exact information since the prediction market is public—or even to commission a classical market research study that you keep proprietary.
I don’t think this reasoning is entirely correct. The firm’s choice depends on how much extra information-value marginal increases in liquidity have in the market. If the marginal dollar increases information value more when spent in providing liquidity to a prediction market than on internal research, then prediction markets will get funded more. Reason to think this is in general the case for many firms: Specialization and fewer transaction costs for hiring/making deals with consulting agencies.
I don’t think this reasoning is entirely correct. The firm’s choice depends on how much extra information-value marginal increases in liquidity have in the market. If the marginal dollar increases information value more when spent in providing liquidity to a prediction market than on internal research, then prediction markets will get funded more. Reason to think this is in general the case for many firms: Specialization and fewer transaction costs for hiring/making deals with consulting agencies.