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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.… Click to show full abstract
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.
Keywords:
optimality state;
state state;
state;
non optimality;
demand;
state monopoly
Journal Title: Economics Letters
Year Published: 2019
Link to full text (if available)
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Journal Title: Economics Letters
Year Published: 2019
Link to full text (if available)
Share on Social Media: Sign Up to like & get
recommendations!