Please use this identifier to cite or link to this item: http://hdl.handle.net/11718/23958
Title: Non-optimality of state by state monopoly pricing with demand uncertainty: an example
Authors: Peck, James
Rampal, Jeevant
Keywords: Monopoly mechanism;Correlated valuations;Bayesian incentive compatibility;Ex-post individual rationality
Issue Date: 2019
Publisher: Economics Letters
Citation: Peck, J., & Rampal, J. (2019). Non-optimality of state by state monopoly pricing with demand uncertainty: An example. Economics Letters, 183. doi:https://doi.org/10.1016/j.econlet.2019.10856
Abstract: This paper considers a monopoly’s profit maximizing problem, where there is a continuum of consumers with unit demand, and valuations are given by one of two possible demand distributions/states. The firm’s problem is to maximize profits by choosing an optimal mechanism among direct revelation mechanisms that satisfy interim incentive compatibility and ex-post individual rationality. We show that setting the monopoly price in each demand state may not be optimal.
URI: http://hdl.handle.net/11718/23958
ISSN: 01651765
Appears in Collections:Journal Articles

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