IDEAS home Printed from https://ideas.repec.org/a/bpj/bejtec/v10y2010i1n37.html
   My bibliography  Save this article

A Note on the Multidimensional Monopolist Problem and Intertemporal Price Discrimination

Author

Listed:
  • Runco Mariano G

    (Auburn University Montgomery, mrunco@aum.edu)

Abstract

This note analyzes a model of a monopolist selling multiple goods to a continuum of heterogeneous consumers. The implementation of Direct Revelation Mechanisms is analyzed in that setting, finding that it is possible for the monopolist to implement all Stochastic Incentive Compatible Mechanisms by committing to post a decreasing sequence of prices. The posted prices depend on time and have the desirable property of being step functions. When the optimal mechanisms are stochastic, it is optimal for the monopolist to price discriminate over time, contrary to the conventional wisdom that a single-good monopolist committed to an ex-ante price strategy will not price discriminate.

Suggested Citation

  • Runco Mariano G, 2010. "A Note on the Multidimensional Monopolist Problem and Intertemporal Price Discrimination," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 10(1), pages 1-8, August.
    • Handle: RePEc:bpj:bejtec:v:10:y:2010:i:1:n:37
    DOI: 10.2202/1935-1704.1659
    as

    Download full text from publisher

    File URL: https://doi.org/10.2202/1935-1704.1659
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.
    File URL: https://libkey.io/10.2202/1935-1704.1659?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. John Conlisk & Eitan Gerstner & Joel Sobel, 1984. "Cyclic Pricing by a Durable Goods Monopolist," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 99(3), pages 489-505.
    2. Manelli, Alejandro M. & Vincent, Daniel R., 2006. "Bundling as an optimal selling mechanism for a multiple-good monopolist," Journal of Economic Theory, Elsevier, vol. 127(1), pages 1-35, March.
    3. Aldo Rustichini & Anne P. Villamil, 1996. "Intertemporal pricing in markets with differential information," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 8(2), pages 211-227.
    4. Manelli, Alejandro M. & Vincent, Daniel R., 2007. "Multidimensional mechanism design: Revenue maximization and the multiple-good monopoly," Journal of Economic Theory, Elsevier, vol. 137(1), pages 153-185, November.
    5. Michael Landsberger & Isaac Meilijson, 1985. "Intertemporal Price Discrimination and Sales Strategy under Incomplete Information," RAND Journal of Economics, The RAND Corporation, vol. 16(3), pages 424-430, Autumn.
    6. Winston Koh, 2006. "The micro-foundations of intertemporal price discrimination," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 27(2), pages 393-410, January.
    7. Roger B. Myerson, 1981. "Optimal Auction Design," Mathematics of Operations Research, INFORMS, vol. 6(1), pages 58-73, February.
    8. Nancy L. Stokey, 1979. "Intertemporal Price Discrimination," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 93(3), pages 355-371.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mariano Runco, 2012. "Retail Pricing and Clearance Sales: The Multidimensional Case," Economics Bulletin, AccessEcon, vol. 32(1), pages 376-381.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Artyom Shneyerov, 2014. "An optimal slow Dutch auction," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 57(3), pages 577-602, November.
    2. Tian Xia & Richard Sexton, 2010. "Brand or Variety Choices and Periodic Sales as Substitute Instruments for Monopoly Price Discrimination," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 36(4), pages 333-349, June.
    3. Jean‐Charles Rochet & John Thanassoulis, 2019. "Intertemporal price discrimination with two products," RAND Journal of Economics, RAND Corporation, vol. 50(4), pages 951-973, December.
    4. Yuan Deng & Jieming Mao & Balasubramanian Sivan & Kangning Wang, 2021. "Optimal Pricing Schemes for an Impatient Buyer," Papers 2106.02149, arXiv.org, revised Feb 2023.
    5. Simon Board, 2005. "Durable-Goods Monopoly with Varying Cohorts," 2005 Meeting Papers 847, Society for Economic Dynamics.
    6. Aniko Ory, 2016. "Consumers on a Leash: Advertised Sales and Intertemporal Price Discrimination," Cowles Foundation Discussion Papers 2047, Cowles Foundation for Research in Economics, Yale University.
    7. Seres, Gyula, 2019. "Uncertain Commitment Power in a Durable Good Monopoly," Other publications TiSEM bece5078-67ec-458b-807c-3, Tilburg University, School of Economics and Management.
    8. Chen, Bo & Ni, Debing, 2017. "Optimal bundle pricing under correlated valuations," International Journal of Industrial Organization, Elsevier, vol. 52(C), pages 248-281.
    9. Mark Armstrong, 2016. "Nonlinear Pricing," Annual Review of Economics, Annual Reviews, vol. 8(1), pages 583-614, October.
    10. Hikmet Gunay, 2014. "Waiting for Signaling Quality," Southern Economic Journal, John Wiley & Sons, vol. 81(2), pages 364-386, October.
    11. Frank Yang, 2022. "The Simple Economics of Optimal Bundling," Papers 2212.12623, arXiv.org, revised Apr 2023.
    12. Bikhchandani, Sushil & Mishra, Debasis, 2022. "Selling two identical objects," Journal of Economic Theory, Elsevier, vol. 200(C).
    13. Sergiu Hart & Noam Nisan, 2013. "Selling Multiple Correlated Goods: Revenue Maximization and Menu-Size Complexity (old title: "The Menu-Size Complexity of Auctions")," Papers 1304.6116, arXiv.org, revised Nov 2018.
    14. Hinnosaar, Toomas, 2017. "Calendar mechanisms," Games and Economic Behavior, Elsevier, vol. 104(C), pages 252-270.
    15. Briest, Patrick & Chawla, Shuchi & Kleinberg, Robert & Weinberg, S. Matthew, 2015. "Pricing lotteries," Journal of Economic Theory, Elsevier, vol. 156(C), pages 144-174.
    16. Hart, Sergiu & Nisan, Noam, 2019. "Selling multiple correlated goods: Revenue maximization and menu-size complexity," Journal of Economic Theory, Elsevier, vol. 183(C), pages 991-1029.
    17. Chawla, Shuchi & Malec, David & Sivan, Balasubramanian, 2015. "The power of randomness in Bayesian optimal mechanism design," Games and Economic Behavior, Elsevier, vol. 91(C), pages 297-317.
    18. Cai, Yang & Daskalakis, Constantinos, 2015. "Extreme value theorems for optimal multidimensional pricing," Games and Economic Behavior, Elsevier, vol. 92(C), pages 266-305.
    19. Vibhanshu Abhishek & Mustafa Dogan & Alexandre Jacquillat, 2021. "Strategic Timing and Dynamic Pricing for Online Resource Allocation," Management Science, INFORMS, vol. 67(8), pages 4880-4907, August.
    20. Negin Golrezaei & Hamid Nazerzadeh & Ramandeep Randhawa, 2020. "Dynamic Pricing for Heterogeneous Time-Sensitive Customers," Manufacturing & Service Operations Management, INFORMS, vol. 22(3), pages 562-581, May.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:bejtec:v:10:y:2010:i:1:n:37. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.