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Convergence of Nonlinear Pricing Mechanisms to Optimal Auction Mechanisms with Applications to Optimal Auctions for Heterogeneous Objects

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Author Info
Eiichiro Kazumori
Abstract

In this paper I first present a new convergence result which will derive an optimal auction mechanism as a limit of standard nonlinear pricing mechanisms. For example, an optimal auction mechanism of Myerson (1981) will be explicitly derived as a limit of nonlinear pricing mechanisms by Mussa and Rosen (1978). Then I apply this convergence result to characterize an optimal auction mechanism for heterogeneous objects from multiproduct nonlinear pricing mechanisms of Rochet and Choné (1998). The optimal auction mechanism has the same reserve price with the nonlinear pricing mechanisms counterpart. Bunching is robust with a new source of bunching based on quantity constraints. I analytically and numerically compute examples

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Paper provided by Econometric Society in its series Econometric Society 2004 North American Summer Meetings with number 610.

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Date of creation: 11 Aug 2004
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Handle: RePEc:ecm:nasm04:610

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Related research
Keywords: optimal auction; nonlinear pricing;

Find related papers by JEL classification:
D42 - Microeconomics - - Market Structure and Pricing - - - Monopoly
D44 - Microeconomics - - Market Structure and Pricing - - - Auctions

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