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Self-Selection Under Non-Ordered Valuations: Type-Splitting, Envy-Cycles, Rationing And Efficiency

Author

Listed:
  • Babu Nahata

    (Department of Economics, University of Louisville)

  • Serguei Kokovin

    (Department of Economics, Novosibirsk State University)

  • Evgeny Zhelobodko

    (Department of Economics, Novosibirsk State University)

Abstract

We analyze self-selection problem when valuations are non-ordered. The corresponding package-pricing solution has specific graph structure. It is helpful in deriving weak su±cient conditions for both partial e±ciency and Pareto-e±ciency. Unlike the ordered valuations case, Pareto e±ciency is shown to be a non-pathological case. Pareto e±ciency and positive consumer surplus are mutually exclusive. Under costs separability optimal package-pricing scheme is shown implementable by small rewards. Counter-examples show that our assumptions are essential. In certain non-ordered situations, package-optimization setting with rations is more appropriate than the standard setting.

Suggested Citation

  • Babu Nahata & Serguei Kokovin & Evgeny Zhelobodko, 2003. "Self-Selection Under Non-Ordered Valuations: Type-Splitting, Envy-Cycles, Rationing And Efficiency," General Economics and Teaching 0307001, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpgt:0307001
    Note: Type of Document - Acrobat PDF; prepared on IBM PC ; to print on HP/PostScript; pages: 43
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    References listed on IDEAS

    as
    1. Michael L. Katz, 1983. "Non-uniform Pricing, Output and Welfare under Monopoly," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 50(1), pages 37-56.
    2. Milgrom, Paul & Shannon, Chris, 1994. "Monotone Comparative Statics," Econometrica, Econometric Society, vol. 62(1), pages 157-180, January.
    3. Varian, Hal R., 1989. "Price discrimination," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 10, pages 597-654, Elsevier.
    4. Guesnerie, Roger & Seade, Jesus, 1982. "Nonlinear pricing in a finite economy," Journal of Public Economics, Elsevier, vol. 17(2), pages 157-179, March.
    5. Babu Nahata & Serguei Kokovin & Evgeny Zhelobodko, 2003. "Package Sizes, Tariffs, Quantity Discount and Premium," General Economics and Teaching 0307002, University Library of Munich, Germany.
    6. Guesnerie, Roger & Laffont, Jean-Jacques, 1984. "A complete solution to a class of principal-agent problems with an application to the control of a self-managed firm," Journal of Public Economics, Elsevier, vol. 25(3), pages 329-369, December.
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    Citations

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    Cited by:

    1. Sergey Kokovin & Babu Nahata, 2017. "Method of Digraphs for Multi-dimensional Screening," Annals of Operations Research, Springer, vol. 253(1), pages 431-451, June.
    2. Sergey Kokovin & Babu Nahata & Evgeny Zhelobodko, 2014. "Distortion in Screening and Spatial Preferences," HSE Working papers WP BRP 83/EC/2014, National Research University Higher School of Economics.
    3. Kimmo Berg, 2013. "Complexity of solution structures in nonlinear pricing," Annals of Operations Research, Springer, vol. 206(1), pages 23-37, July.
    4. Kokovin, Sergey & Nahata, Babu & Zhelobodko, Evgeny, 2013. "Dupuit conjecture for constrained screening: Overall distortion and type-partitioning," Economics Letters, Elsevier, vol. 118(3), pages 439-441.

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    More about this item

    Keywords

    Principal-agent; self-selection; nonlinear pricing; package pricing; Pareto e±ciency; implementation; graph structure; envy cycles;
    All these keywords.

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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