English

Selling two complementary goods

Theoretical Economics 2022-07-15 v4

Abstract

A seller is selling a pair of divisible complementary goods to an agent. The agent consumes the goods only in a specific ratio and freely disposes of excess in either goods. The value of the bundle and the ratio are private information of the agent. In this two-dimensional type space model, we characterize the incentive constraints and show that the optimal (expected revenue-maximizing) mechanism is a ratio-dependent posted price or a posted price mechanism for a class of distributions. We also show that the optimal mechanism is a posted price mechanism when the value and the ratio are independently distributed.

Keywords

Cite

@article{arxiv.2011.05840,
  title  = {Selling two complementary goods},
  author = {Komal Malik and Kolagani Paramahamsa},
  journal= {arXiv preprint arXiv:2011.05840},
  year   = {2022}
}

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