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Screening by Mode of Trade

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  • Juan Beccuti
  • Marc Moeller

Abstract

This paper proposes a mechanism design approach, capable of endogenizing a monopolist’s choice between selling and renting in a non-anonymous durable goods setting with short-term commitment. Allowing for mechanisms that determine the good’s allocation not only at the beginning but also at the end of a given period, we show that the profit-maximizing mechanism features screening by mode of trade. By selling to high types while renting to low types, the monopolist overcomes the obstacles encountered by intertemporal price discrimination and induces immediate separation of types for arbitrary low priors.

Suggested Citation

  • Juan Beccuti & Marc Moeller, 2019. "Screening by Mode of Trade," Diskussionsschriften dp1908, Universitaet Bern, Departement Volkswirtschaft.
  • Handle: RePEc:ube:dpvwib:dp1908
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    References listed on IDEAS

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    Cited by:

    1. Juan Beccuti, 2020. "On the Optimality of Price-posting in Rental Markets," Diskussionsschriften dp2007, Universitaet Bern, Departement Volkswirtschaft.

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    More about this item

    Keywords

    Durable goods; Dynamic mechanism design; Coase problem; Ratchet effect; Screening;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly

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