zbMATH — the first resource for mathematics

Bundling as an optimal selling mechanism for a multiple-good monopolist. (English) Zbl 1122.91032
Summary: Multiple objects may be sold by posting a schedule consisting of one price for each possible bundle and permitting the buyer to select the price–bundle pair of his choice. We identify conditions that must be satisfied by any price schedule that maximizes revenue within the class of all such schedules. We then provide conditions under which a price schedule maximizes expected revenue within the class of all incentive compatible and individually rational mechanisms in the \(n\)-object case. We use these results to characterize environments, mainly distributions of valuations, where bundling is the optimal mechanism in the two and three good cases.

91B26 Auctions, bargaining, bidding and selling, and other market models
Full Text: DOI
[1] Armstrong, M., Multiproduct nonlinear pricing, Econometrica, 64, 1, 51-76, (1996) · Zbl 0861.90015
[2] Degroot, M., Optimal statistical decisions, (1970), McGraw-Hill New York · Zbl 0225.62006
[3] Jehiel, P.; Moldovanu, B.; Stachetti, E., Multidimensional mechanism design for auctions with externalities, J. econ. theory, 85, 258-293, (1999) · Zbl 1028.91539
[4] A. Kolmogorov, S. Fomin (Translated by R.Silverman), Introductory Real Analysis, Dover Publications, New York, 1970. · Zbl 0213.07305
[5] Krishna, V.; Maenner, E., Convex-potentials with an application to mechanism design, Econometrica, 69, 4, 1113-1120, (2000)
[6] Manelli, A.; Vincent, D., Optimal procurement mechanisms, Econometrica, 63, 3, 591-620, (1995) · Zbl 0837.90033
[7] A. Manelli, D. Vincent, Optimal pricing in a multiple-good monopoly, mimeo, 2002.
[8] McAfee, R.P.; McMillan, J., Multidimensional incentive compatibility and mechanisms design, J. economic theory, 46, 335-354, (1988) · Zbl 0661.90008
[9] McAfee, R.P.; McMillan, J.; Whinston, M., Multiproduct monopoly, commodity bundling, and correlation of values, Quarterly J. econ., 104, 371-383, (1989)
[10] Myerson, R., Incentive compatibility and the bargaining problem, Econometrica, 47, 61-74, (1979) · Zbl 0399.90008
[11] Myerson, R., Optimal auction design, Math. oper. res., 6, 58-73, (1981) · Zbl 0496.90099
[12] Rochet, J.-C., The taxation principle and multi-time hamilton – jacobi equations, J. math. econ., 14, 113-128, (1985) · Zbl 0594.90006
[13] J.-C. Rochet, Ironing, sweeping, and multidimensional screening, Working Paper 95.11.374, 1995, GREMAQ.
[14] Rochet, J.-C.; ChonĂ©, P., Ironing, sweeping, and multidimensional screening, Econometrica, 66, 4, 783-826, (1998) · Zbl 1015.91515
[15] Samuelson, W., Bargaining with asymmetric information, Econometrica, 53, 995-1005, (1984) · Zbl 0552.90102
[16] J. Thanassoulis, Haggling over substitutes, J. Econ. Theory 117 (2) (2004) 217-245. · Zbl 1181.91117
This reference list is based on information provided by the publisher or from digital mathematics libraries. Its items are heuristically matched to zbMATH identifiers and may contain data conversion errors. It attempts to reflect the references listed in the original paper as accurately as possible without claiming the completeness or perfect precision of the matching.