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Undivide and Conquer: On Selling a Divisible and Homogeneous Good

Author

Listed:
  • Levy Omer

    (Department of Computer Science, Bar-Ilan University, Ramat Gan, Israel)

  • Smorodinsky Rann

    (Department of Industrial Engineering and Management, Technion – Israel Institute of Technology, Haifa, Israel)

  • Tennenholtz Moshe

    (Department of Industrial Engineering and Management, Technion – Israel Institute of Technology, Haifa, Israel Microsoft Research, Herzliya, Israel)

Abstract

With the prevalence of cloud computing emerges the challenges of pricing cloud computing services. There are various characteristics of cloud computing which make the problem unique. We study an abstract model which focuses on one such aspect – the sale of a homogeneous and fully divisible good. We cast onto our model the idea of bundling, studied within the context of monopolist pricing of indivisible goods. We demonstrate how selling a divisible good as an indivisible one may increase seller revenues and characterize when this phenomenon occurs, and the corresponding gain factors.

Suggested Citation

  • Levy Omer & Smorodinsky Rann & Tennenholtz Moshe, 2015. "Undivide and Conquer: On Selling a Divisible and Homogeneous Good," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 15(1), pages 1-23, January.
    • Handle: RePEc:bpj:bejtec:v:15:y:2015:i:1:p:23:n:5
    DOI: 10.1515/bejte-2014-0002
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    References listed on IDEAS

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    3. Jehiel, Philippe & Meyer-ter-Vehn, Moritz & Moldovanu, Benny, 2007. "Mixed bundling auctions," Journal of Economic Theory, Elsevier, vol. 134(1), pages 494-512, May.
    4. Holzman, Ron & Monderer, Dov, 2004. "Characterization of ex post equilibrium in the VCG combinatorial auctions," Games and Economic Behavior, Elsevier, vol. 47(1), pages 87-103, April.
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    Keywords

    bundling; VCG; auctions;
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