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The Optimal Mechanism for Selling to Budget-Constrained Consumers

Author

Listed:
  • Che, Y.K.
  • Gale, I.

Abstract

This paper finds an optimal mechanism for selling an indivisible good to consumers who may be budget-constrained. Unlike the case where buyers are not budget constrained, a single posted price is not typically optimal. An optimal mechanism generally consists of a continuum of lotteries indexed by the probability of comsumption and the entry fee.
(This abstract was borrowed from another version of this item.)
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Che, Y.K. & Gale, I., 1995. "The Optimal Mechanism for Selling to Budget-Constrained Consumers," Working papers 9415r, Wisconsin Madison - Social Systems.
  • Handle: RePEc:att:wimass:9415r
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    Cited by:

    1. GAUTIER, Axel & MITRA, Manipushpak, 2003. "Financing infrastructure under budget constraints," CORE Discussion Papers 2003037, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    2. Mark Armstrong & David E.M. Sappington, 2006. "Regulation, Competition and Liberalization," Journal of Economic Literature, American Economic Association, vol. 44(2), pages 325-366, June.

    More about this item

    Keywords

    CONSUMPTION; BUDGET;

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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