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Club good intermediaries

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  • Loertscher, Simon
  • Marx, Leslie M.

Abstract

The emergence and ubiquitous presence in everyday life of digital goods such as songs, movies, and e-books give renewed salience to the problem of providing public goods with exclusion. Because digital goods are typically traded via intermediaries like iTunes, Amazon, and Netflix, the question arises as to the optimal pricing mechanism for such club good intermediaries. We derive the direct Bayesian optimal mechanism for allocating club goods when the mechanism designer is an intermediary that neither produces nor consumes the goods, and we develop an indirect mechanism that implements this mechanism. We also derive sufficient conditions for the intermediary-optimal mechanism to be implementable with revenue sharing contracts, which are widely used in e-business.

Suggested Citation

  • Loertscher, Simon & Marx, Leslie M., 2017. "Club good intermediaries," International Journal of Industrial Organization, Elsevier, vol. 50(C), pages 430-459.
    • Handle: RePEc:eee:indorg:v:50:y:2017:i:c:p:430-459
    DOI: 10.1016/j.ijindorg.2016.05.007
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    Cited by:

    1. Simon Loertscher & Leslie M. Marx, 2022. "To sell public or private goods," Review of Economic Design, Springer;Society for Economic Design, vol. 26(3), pages 385-415, September.
    2. Bade, Sophie & Segal-Halevi, Erel, 2023. "Fairness for multi-self agents," Games and Economic Behavior, Elsevier, vol. 141(C), pages 321-336.
    3. John Asker & Mariagiovanna Baccara & SangMok Lee, 2021. "Patent auctions and bidding coalitions: structuring the sale of club goods," RAND Journal of Economics, RAND Corporation, vol. 52(3), pages 662-690, September.
    4. Sophie Bade & Erel Segal-Halevi, 2018. "Fairness for Multi-Self Agents," Papers 1811.06684, arXiv.org, revised Apr 2022.

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    More about this item

    Keywords

    Revenue maximization; Excludable public goods; Two-sided platforms; Optimal pricing; Digital goods;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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