Kokovin, Sergey; Vasilev, Fedor Screening in space: rich and poor consumers in a linear city. (English) Zbl 1471.91172 Ural Math. J. 7, No. 1, 66-80 (2021). Summary: Unlike standard models of monopolistic screening (second-degree price discrimination), we consider a situation where consumers are heterogeneous not only vertically, in their willingness to pay, but also horizontally, in their tastes or “addresses” a la Hotelling’s linear city. For such a screening game, a novel model is composed. We formulate the game as an optimization program, prove the existence of equilibria, develop a method to calculate equilibria, and characterize their properties. Namely, the solution structure of the resulting menu of contracts can be either a “chain of envy” like in usual screening or a number of disconnected chains. Unlike usual screening, “almost all” consumers get positive informational rent. Importantly, the model can be extended to oligopoly screening. MSC: 91B24 Microeconomic theory (price theory and economic markets) 91B43 Principal-agent models Keywords:screening; price discrimination; spatial competition; linear city; principal-agent model; non-convex optimization × Cite Format Result Cite Review PDF Full Text: DOI MNR References: [1] Chade H., Swinkels J., “Screening in vertical oligopolies”, Econometrica, 89:3 (2021), 1265-1311 · Zbl 1475.91184 · doi:10.3982/ECTA17016 [2] Hotelling H., “Stability in competition”, Economic J., 39:153 (1929), 41-57 · doi:10.2307/2224214 [3] Katz M. L., “Nonuniform pricing with unobservable numbers of purchases”, Rev. Econ. Stud., 51:3 (1984), 461-470 · Zbl 0535.90018 · doi:10.2307/2297434 [4] Kokovin S. G., Nahata B., “Method of digraphs for multi-dimensional screening”, Ann. Oper. Res., 253:1 (2017), 431-451 · Zbl 1406.91236 · doi:10.1007/s10479-016-2320-3 [5] Laffont J-J., Martimort D., The Theory of Incentives: The Principal-Agent Model, Princeton Univ. Press, Princeton, 2002, 421 pp. · doi:10.2307/j.ctv7h0rwr [6] Rothschild M., Stiglitz J., “Equilibrium in competitive insurance markets: an essay on the economics of imperfect information”, Quart. J. Econ., 90:4 (1976), 629-649 · doi:10.2307/1885326 [7] Spence A. M., “Job market signaling”, Quart. J. Econ., 87:3 (1973), 355-374 · doi:10.2307/1882010 [8] Stole L. A., “Price discrimination and competition”, Handbook Ind. Organiz., 3 (2007), 2221-2299 · doi:10.1016/S1573-448X(06)03034-2 [9] Torbenko A., “Linear city models: overview and typology”, J. New Econ. Assoc., 25:1 (2015), 12-38 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. In some cases that data have been complemented/enhanced by data from zbMATH Open. This attempts to reflect the references listed in the original paper as accurately as possible without claiming completeness or a perfect matching.