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Discounts For Qualified Buyers Only

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  • David McAdams

Abstract

The standard monopoly pricing problem is re-considered when the buyer can disclose his type (e.g. age, income, experience) at some cost. In the optimal sales mechanism with costly disclosure, the seller posts a price list, including a \sticker price" available to any buyer and a schedule of discounts available to those who disclose certain types. Unambiguous welfare implications of such a pricing policy are available in the limiting case when the buyer's type is fully informative: (i) The buyer is better o and the monopolist worse o when disclosure is more costly. (ii) When discounts are suciently rare, social welfare is strictly less than if the seller could not o er discounts.

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  • David McAdams, 2010. "Discounts For Qualified Buyers Only," Working Papers 10-62, Duke University, Department of Economics.
  • Handle: RePEc:duk:dukeec:10-62
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