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The Optimal Mechanism for Selling to Budget-Constrained Consumers

Author

Listed:
  • Che, Y.K.
  • Gale, I.

Abstract

This paper finds an optimal mechanism for selling an indivisible good to consumers who may be budget-constrained. Unlike the standard case, where buyers are not budget-constrained, a single posted price is not optimal. An optimal mechanism generally consists of a continuum of lotteries indexed by the probability of consumption and the entry fee.
(This abstract was borrowed from another version of this item.)
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Che, Y.K. & Gale, I., 1995. "The Optimal Mechanism for Selling to Budget-Constrained Consumers," Working papers 9415r, Wisconsin Madison - Social Systems.
    • Handle: RePEc:att:wimass:9415r
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    Cited by:

    1. Laffont, Jean-Jacques & Robert, Jacques, 1996. "Optimal auction with financially constrained buyers," Economics Letters, Elsevier, vol. 52(2), pages 181-186, August.
    2. Mark Armstrong & David E.M. Sappington, 2006. "Regulation, Competition and Liberalization," Journal of Economic Literature, American Economic Association, vol. 44(2), pages 325-366, June.
    3. Arijit Sen, 1998. "Seller Financing of Consumer Durables," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 7(3), pages 435-460, September.
    4. Gautier, Axel & Mitra, Manipushpak, 2002. "Financing Infrastructure under Budget Constraint," Bonn Econ Discussion Papers 15/2002, University of Bonn, Bonn Graduate School of Economics (BGSE).

    More about this item

    Keywords

    CONSUMPTION; BUDGET;

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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