IDEAS home Printed from https://ideas.repec.org/a/eee/ecmode/v36y2014icp348-353.html
   My bibliography  Save this article

Monopolistic screening and uninformed buyers

Author

Listed:
  • Bose, Subir

Abstract

In the standard monopolistic screening problem, buyers obtain information rent as a result of possessing private information; if a contract can be offered before the buyer knows his valuation, the seller can extract the full (expected) surplus. I consider a situation where the buyer may or may not have private information about his valuation at the time the contract is offered. Is the seller (strictly) better off as compared to the standard situation? The answer depends crucially on the specific model. In the 2-types model, unless the probability (that the buyer is uninformed) reaches a critical threshold, the seller is unable to benefit from the buyer's ignorance. In the continuum-types model, on the other hand, optimal expected profit is strictly higher than in the standard model whenever this probability is positive.

Suggested Citation

  • Bose, Subir, 2014. "Monopolistic screening and uninformed buyers," Economic Modelling, Elsevier, vol. 36(C), pages 348-353.
    • Handle: RePEc:eee:ecmode:v:36:y:2014:i:c:p:348-353
    DOI: 10.1016/j.econmod.2013.09.057
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0264999313004264
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.econmod.2013.09.057?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Krahmer Daniel & Strausz Roland, 2008. "Ex Post Private Information and Monopolistic Screening," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 8(1), pages 1-27, October.
    2. Strausz, Roland, 2006. "Deterministic versus stochastic mechanisms in principal-agent models," Journal of Economic Theory, Elsevier, vol. 128(1), pages 306-314, May.
    3. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680, Decembrie.
    4. Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August.
    5. Nocke, Volker & Peitz, Martin & Rosar, Frank, 2011. "Advance-purchase discounts as a price discrimination device," Journal of Economic Theory, Elsevier, vol. 146(1), pages 141-162, January.
    6. Pascal Courty & Li Hao, 2000. "Sequential Screening," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 67(4), pages 697-717.
    7. Drew Fudenberg & Jean Tirole, 1991. "Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061414, December.
    8. Eric Maskin & John Riley, 1984. "Monopoly with Incomplete Information," RAND Journal of Economics, The RAND Corporation, vol. 15(2), pages 171-196, Summer.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kimmo Berg, 2013. "Complexity of solution structures in nonlinear pricing," Annals of Operations Research, Springer, vol. 206(1), pages 23-37, July.
    2. Krähmer, Daniel & Strausz, Roland, 2017. "Sequential versus static screening: An equivalence result," Games and Economic Behavior, Elsevier, vol. 106(C), pages 317-328.
    3. Bang, Se Hoon & Kim, Jaesoo, 2013. "Price discrimination via information provision," Information Economics and Policy, Elsevier, vol. 25(4), pages 215-224.
    4. Belleflamme,Paul & Peitz,Martin, 2015. "Industrial Organization," Cambridge Books, Cambridge University Press, number 9781107687899, January.
    5. Jaesoo Kim & Dongsoo Shin, 2016. "Price Discrimination with Demarketing," Journal of Industrial Economics, Wiley Blackwell, vol. 64(4), pages 773-807, December.
    6. Philippe Choné & Romain De Nijs & Lionel Wilner, 2012. "Intertemporal Pricing with Unobserved Consumer Arrival Times," Working Papers 2012-23, Center for Research in Economics and Statistics.
    7. Renato Gomes & Alessandro Pavan, 2013. "Cross-Subsidization and Matching Design," Discussion Papers 1559, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    8. Dirk Bergemann & Benjamin Brooks & Stephen Morris, 2015. "The Limits of Price Discrimination," American Economic Review, American Economic Association, vol. 105(3), pages 921-957, March.
    9. Alessandro Acquisti & Hal R. Varian, 2005. "Conditioning Prices on Purchase History," Marketing Science, INFORMS, vol. 24(3), pages 367-381, May.
    10. Hui Xiong & Ying-Ju Chen, 2013. "Product Line Design with Deliberation Costs: A Two-Stage Process," Decision Analysis, INFORMS, vol. 10(3), pages 225-244, September.
    11. Se Hoon Bang & Jaesoo Kim & Young-Ro Yoon, 2014. "Reverse Price Discrimination with Bayesian Buyers," Journal of Industrial Economics, Wiley Blackwell, vol. 62(2), pages 286-308, June.
    12. Liang Guo, 2023. "Overage Charge or Loyalty Discount: When Should Extra Consumptions Be Penalized or Rewarded?," Marketing Science, INFORMS, vol. 42(3), pages 614-633, May.
    13. Masahiro Watabe, 2016. "A characterization of implementability of decision rules via a menu of three-part tariffs," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 6(3), pages 459-479, December.
    14. Noldeke, Georg & Samuelson, Larry, 2007. "Optimal bunching without optimal control," Journal of Economic Theory, Elsevier, vol. 134(1), pages 405-420, May.
    15. Ellman, Matthew & Hurkens, Sjaak, 2019. "Optimal crowdfunding design," Journal of Economic Theory, Elsevier, vol. 184(C).
    16. Gomes, Renato & Pavan, Alessandro, 2016. "Many-to-many matching and price discrimination," Theoretical Economics, Econometric Society, vol. 11(3), September.
    17. Renato Gomes & Alessandro Pavan, 2011. "Price Discrimination in Many-to-Many Matching Markets," Discussion Papers 1540, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    18. Gauthier, Stéphane & Laroque, Guy, 2014. "On the value of randomization," Journal of Economic Theory, Elsevier, vol. 151(C), pages 493-507.
    19. Krähmer, Daniel & Kováč, Eugen, 2016. "Optimal sequential delegation," Journal of Economic Theory, Elsevier, vol. 163(C), pages 849-888.
    20. Hoppe, Eva I. & Schmitz, Patrick W., 2015. "Do sellers offer menus of contracts to separate buyer types? An experimental test of adverse selection theory," Games and Economic Behavior, Elsevier, vol. 89(C), pages 17-33.

    More about this item

    Keywords

    Monopolistic screening; Uninformed buyers;

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecmode:v:36:y:2014:i:c:p:348-353. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/30411 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.