A Property of Solutions to Linear Monopoly Problems
We extend the ‘no-haggling’ result of Riley and Zeckhauser (1983) to the class of linear multiproduct monopoly problems when the buyer’s valuations are smoothly distributed. In particular we show that there is no loss for the seller in optimizing over mechanisms such that all allocations belong to the boundary of the feasible set. The set of potentially optimal mechanisms can be further restricted when the costs are sufficiently low: the optimal mechanisms use only allocations from the ‘north-east’ boundary of the feasible set and the null allocation.
|Date of creation:||2010|
|Date of revision:|
|Contact details of provider:|| Postal: Department of Economics, Reference Centre, Social Science Centre, University of Western Ontario, London, Ontario, Canada N6A 5C2|
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- Alejandro M. Manelli & Daniel R. Vincent, 2004.
"Multidimensional Mechanism Design: Revenue Maximization and the Multiple-Good Monopoly,"
2004.153, Fondazione Eni Enrico Mattei.
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- Gregory Pavlov, 2010.
"Optimal Mechanism for Selling Two Goods,"
UWO Department of Economics Working Papers
20103, University of Western Ontario, Department of Economics.
- McAfee, R. Preston & McMillan, John, 1988. "Multidimensional incentive compatibility and mechanism design," Journal of Economic Theory, Elsevier, vol. 46(2), pages 335-354, December.
- Armstrong, Mark, 1996. "Multiproduct Nonlinear Pricing," Econometrica, Econometric Society, vol. 64(1), pages 51-75, January.
- William James Adams & Janet L. Yellen, 1976. "Commodity Bundling and the Burden of Monopoly," The Quarterly Journal of Economics, Oxford University Press, vol. 90(3), pages 475-498.
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