All solution graphs in multidimensional screening
AbstractWe study general discrete-types multidimensional screening without any noticeable restrictions on valuations, using instead epsilon-relaxation of the incentive-compatibility constraints. Any active (becoming equality) constraint can be perceived as "envy" arc from one type to another, so the set of active constraints is a digraph. We find that: (1) any solution has an in-rooted acyclic graph ("river"); (2) for any logically feasible river there exists a screening problem resulting in such river. Using these results, any solution is characterized both through its spanning-tree and through its Lagrange multipliers, that can help in finding solutions and their efficiency/distortion properties.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 30025.
Date of creation: Nov 2010
Date of revision:
incentive compatibility; multidimensional screening; second-degree price discrimination; non-linear pricing; graphs;
Other versions of this item:
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
- D42 - Microeconomics - - Market Structure and Pricing - - - Monopoly
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