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Monopoly with Resale

Author

Listed:
  • Giacomo Calzolari

    (University of Bologna)

  • Alessandro Pavan

    (Northwestern University)

Abstract

We examine the intricacies associated with the design of revenue-maximizing mechanisms for a monopolist who expects her buyers to resell. We consider two cases: resale to a third party who does not participate in the primary market and interbidder resale, where the winner resells to the losers. To influence the resale outcome, the monopolist must design an allocation rule and a disclosure policy that optimally fashion the beliefs of the participants in the secondary market. Our results show that the revenue-maximizing mechanism may require a stochastic selling procedure and a disclosure policy richer than the simple announcement of the decision to sell to a particular buyer.

Suggested Citation

  • Giacomo Calzolari & Alessandro Pavan, 2006. "Monopoly with Resale," RAND Journal of Economics, The RAND Corporation, vol. 37(2), pages 362-375, Summer.
    • Handle: RePEc:rje:randje:v:37:y:2006:2:p:362-375
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    Citations

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    Cited by:

    1. Pancs, Romans, 2013. "Sequential negotiations with costly information acquisition," Games and Economic Behavior, Elsevier, vol. 82(C), pages 522-543.
    2. Daley, Brendan & Schwarz, Michael & Sonin, Konstantin, 2012. "Efficient investment in a dynamic auction environment," Games and Economic Behavior, Elsevier, vol. 75(1), pages 104-119.
    3. Sui, Yong, 2006. "All-pay auctions with resale," MPRA Paper 11463, University Library of Munich, Germany, revised Oct 2007.
    4. Zhang, Jun, 2013. "Revenue maximizing with return policy when buyers have uncertain valuations," International Journal of Industrial Organization, Elsevier, vol. 31(5), pages 452-461.
    5. Zhang, Jun & Wang, Ruqu, 2013. "Optimal mechanism design with resale via bargaining," Journal of Economic Theory, Elsevier, vol. 148(5), pages 2096-2123.

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