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Maximal Revenue with Multiple Goods: Nonmonotonicity and Other Observations

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  • Sergiu Hart
  • Philip J. Reny

Abstract

Consider the problem of maximizing the revenue from selling a number of goods to a single buyer. We show that, unlike the case of one good, when the buyer's values for the goods increase the seller's maximal revenue may well decrease. We also provide a characterization of revenue-maximizing mechanisms (more generally, of "seller-favorable" mechanisms) that circumvents nondifferentiability issues. Finally, through simple and transparent examples, we clarify the need for and the use of randomization when maximizing revenue in the multiple-goods versus the one-good case.

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Paper provided by David K. Levine in its series Levine's Working Paper Archive with number 786969000000000625.

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Date of creation: 15 Dec 2012
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Handle: RePEc:cla:levarc:786969000000000625

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  1. Manelli, Alejandro M. & Vincent, Daniel R., 2006. "Bundling as an optimal selling mechanism for a multiple-good monopolist," Journal of Economic Theory, Elsevier, vol. 127(1), pages 1-35, March.
  2. Sergiu Hart & Noam Nisan, 2012. "Approximate Revenue Maximization with Multiple Items," Discussion Paper Series dp606, The Center for the Study of Rationality, Hebrew University, Jerusalem.
  3. Thanassoulis, John, 2004. "Haggling over substitutes," Journal of Economic Theory, Elsevier, vol. 117(2), pages 217-245, August.
  4. Manelli, Alejandro M. & Vincent, Daniel R., 2007. "Multidimensional mechanism design: Revenue maximization and the multiple-good monopoly," Journal of Economic Theory, Elsevier, vol. 137(1), pages 153-185, November.
  5. Pavlov Gregory, 2011. "Optimal Mechanism for Selling Two Goods," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 11(1), pages 1-35, February.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. “Maximal Revenue with Multiple Goods: Nonmonotonicity and Other Observations,” S. Hart and P. Reny (2013)
    by afinetheorem in A Fine Theorem on 2013-11-12 10:57:37

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