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The Inclusiveness of Exclusion

Author

Listed:
  • Paulo Barelli
  • Suren Basov
  • Mauricio Bugarin
  • Ian King

Abstract

We extend Armstrong’s (1996) result on exclusion in multidimensional screening models in two key ways, providing support for the view that this result is quite generic and applicable to many different markets. First, we relax the strong technical assumptions he imposed on preferences and consumer types. Second, we extend the result beyond the monopolistic market structure to generalized oligopoly settings with entry. We also analyse applications to several quite different settings: credit markets, automobile industry, research grants, the regulation of a monopolist with unknown demand and cost functions, and involuntary unemployment in the labor market.

Suggested Citation

  • Paulo Barelli & Suren Basov & Mauricio Bugarin & Ian King, 2010. "The Inclusiveness of Exclusion," Business and Economics Working Papers 089, Unidade de Negocios e Economia, Insper.
    • Handle: RePEc:aap:wpaper:089
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    References listed on IDEAS

    as
    1. Armstrong, Mark, 1996. "Multiproduct Nonlinear Pricing," Econometrica, Econometric Society, vol. 64(1), pages 51-75, January.
    2. Basov Suren & Yin Xiangkang, 2010. "Optimal Screening by Risk-Averse Principals," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 10(1), pages 1-25, March.
    3. Rochet, J. C., 1985. "The taxation principle and multi-time Hamilton-Jacobi equations," Journal of Mathematical Economics, Elsevier, vol. 14(2), pages 113-128, April.
    4. Bertrand Villeneuve, 2003. "Concurrence et antisélection multidimensionnelle en assurance," Annals of Economics and Statistics, GENES, issue 69, pages 119-142.
    5. Paulo Klinger Monteiro & Frank Page & Benar fux Svaiter, 2001. "The one object optimal auction and the desirability of exclusion," GE, Growth, Math methods 0112002, University Library of Munich, Germany.
    6. Suren Basov, 2005. "Multidimensional Screening," Studies in Economic Theory, Springer, number 978-3-540-27313-4, October.
    7. Ricardo Lagos & Randall Wright, 2005. "A Unified Framework for Monetary Theory and Policy Analysis," Journal of Political Economy, University of Chicago Press, vol. 113(3), pages 463-484, June.
    8. Mark Armstrong, 1999. "Price Discrimination by a Many-Product Firm," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 66(1), pages 151-168.
    9. repec:dau:papers:123456789/5370 is not listed on IDEAS
    10. Smart, Michael, 2000. "Competitive Insurance Markets with Two Unobservables," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 41(1), pages 153-169, February.
    11. repec:adr:anecst:y:2003:i:69:p:06 is not listed on IDEAS
    12. Jean-Charles Rochet & Lars A. Stole, 2002. "Nonlinear Pricing with Random Participation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 69(1), pages 277-311.
    13. Jean-Charles Rochet & Philippe Chone, 1998. "Ironing, Sweeping, and Multidimensional Screening," Econometrica, Econometric Society, vol. 66(4), pages 783-826, July.
    14. S. Basov & P. Bardsley, 2004. "A Model of Grants Distribution: A Screening Approach," Econometric Society 2004 Australasian Meetings 252, Econometric Society.
    15. Armstrong, Mark & Vickers, John, 2001. "Competitive Price Discrimination," RAND Journal of Economics, The RAND Corporation, vol. 32(4), pages 579-605, Winter.
    16. Armstrong, Mark, 1999. "Optimal Regulation with Unknown Demand and Cost Functions," Journal of Economic Theory, Elsevier, vol. 84(2), pages 196-215, February.
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