Nonlinear Pricing with Arbitrage: On the Role of Correlation
AbstractIn nonlinear pricing environment with correlated types, we characterize optimal selling mechanisms when buyers could form a coalition to coordinate their reports and to arbitrage on the goods. We find that when the types of agents are weakly positively correlated, the optimal weakly collusion-proof mechanism calls for distortions away from e±ciency obtained without arbitrage; when the types are weakly negatively correlated, the monopolist can achieve the same profit regardless of whether or not buyers can arbitrage on their goods. Allowing arbitrage within coalitions result in right discontinuity between the correlated and uncorrelated environment, but the left continuity is still available.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 41207.
Date of creation: Aug 2008
Date of revision:
Nonlinear pricing; weakly collusion-proof; arbitrage; correlated types;
Find related papers by JEL classification:
- D62 - Microeconomics - - Welfare Economics - - - Externalities
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- D42 - Microeconomics - - Market Structure and Pricing - - - Monopoly
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Baldwin, Laura H & Marshall, Robert C & Richard, Jean-Francois, 1997.
"Bidder Collusion at Forest Service Timber Sales,"
Journal of Political Economy,
University of Chicago Press, vol. 105(4), pages 657-99, August.
- Laffont, Jean-Jacques & Martimort, David, 1998.
"Mechanism Design with Collusion and Correlation,"
IDEI Working Papers
81, Institut d'Économie Industrielle (IDEI), Toulouse.
- Faure-Grimaud, Antoine & Laffont, Jean-Jacques & Martimort, David, 2003.
"Collusion, Delegation and Supervision with Soft Information,"
IDEI Working Papers
167, Institut d'Économie Industrielle (IDEI), Toulouse.
- Antoine Faure-Grimaud & Jean-Jacques Laffont & David Martimort, 2003. "Collusion, Delegation and Supervision with Soft Information," Review of Economic Studies, Wiley Blackwell, vol. 70(2), pages 253-279, 04.
- Antoine Faure-Grimaud & Jean-Jacques Laffont & David Martimort, 2003. "Collusion, Delegation and Supervision with Soft Information," Review of Economic Studies, Oxford University Press, vol. 70(2), pages 253-279.
- Doh Shin Jeon & Domenico Menicucci, 2001.
"Optimal second-degree price discrimination and arbitrage: On the role of asymetric information among buyers,"
Economics Working Papers
624, Department of Economics and Business, Universitat Pompeu Fabra, revised Jan 2005.
- Doh-Shin Jeon & Domenico Menicucci, 2005. "Optimal Second-Degree Price Discrimination and Arbitrage: On the Role of Asymmetric Information Among Buyers," RAND Journal of Economics, The RAND Corporation, vol. 36(2), pages 337-360, Summer.
- Doh-Shin Jeon & Domenico Menicucci, 2001. "Optimal Second-degree Price Discrimination and Arbitrage: On the Role of Asymmetric Information among Buyers," Working Papers 21, Barcelona Graduate School of Economics.
- Tirole, Jean, 1986. "Hierarchies and Bureaucracies: On the Role of Collusion in Organizations," Journal of Law, Economics and Organization, Oxford University Press, vol. 2(2), pages 181-214, Fall.
- Laffont, Jean-Jacques, 2001.
"Incentives and Political Economy,"
Oxford University Press, number 9780199248681.
- Jean-Jacques Laffont & David Martimort, 1997.
"Collusion under Asymmetric Information,"
Econometric Society, vol. 65(4), pages 875-912, July.
- Cremer, Jacques & McLean, Richard P, 1988. "Full Extraction of the Surplus in Bayesian and Dominant Strategy Auctions," Econometrica, Econometric Society, vol. 56(6), pages 1247-57, November.
- Lucia Quesada, 2005. "Collusion as an Informed Principal Problem," Game Theory and Information 0504002, EconWPA.
- Cremer, Jacques & McLean, Richard P, 1985. "Optimal Selling Strategies under Uncertainty for a Discriminating Monopolist When Demands Are Interdependent," Econometrica, Econometric Society, vol. 53(2), pages 345-61, March.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).
If references are entirely missing, you can add them using this form.