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On the Optimality of Pure Bundling for a Monopolist

Menicucci, Domenico, Hurkens, Sjaak and Jeon, Doh-Shin (2015) On the Optimality of Pure Bundling for a Monopolist. Journal of Mathematical Economics, 60. pp. 33-42.

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This paper considers a monopolist selling two objects to a single buyer with privately observed valuations. We prove that if each buyer’s type has a non-negative virtual valuation for each object, then the optimal price schedule is such that the objects are sold only in a bundle; weaker conditions suffice if valuations are independently and identically distributed. Under somewhat stronger conditions, pure bundling is the optimal sale mechanism among all individually rational and incentive compatible mechanisms.

Item Type: Article
Language: English
Date: 2015
Refereed: Yes
Uncontrolled Keywords: Monopoly Pricing, Price discrimination, Multi-dimensional mechanism design, Pure Bundling
JEL Classification: D42 - Monopoly
D82 - Asymmetric and Private Information
L11 - Production, Pricing, and Market Structure; Size Distribution of Firms
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 21 Sep 2015 13:08
Last Modified: 02 Apr 2021 15:49
OAI Identifier:

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