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Selling two complementary goods

Author

Listed:
  • Komal Malik

    (Indian Statistical Institute)

  • Kolagani Paramahamsa

    (Indian Statistical Institute)

Abstract

A seller is selling a pair of divisible complementary goods to an agent. The agent consumes the goods only in a specific ratio and freely disposes of excess in either good. The value of the bundle and the ratio are the agent’s private information. In this two-dimensional type space model, we characterize the incentive constraints and show that the optimal (expected revenue-maximizing) mechanism is a ratio-dependent posted price or a posted price mechanism for a class of distributions. We also show that the optimal mechanism is a posted price mechanism when the value and the ratio are independently distributed.

Suggested Citation

  • Komal Malik & Kolagani Paramahamsa, 2024. "Selling two complementary goods," International Journal of Game Theory, Springer;Game Theory Society, vol. 53(2), pages 423-447, June.
    • Handle: RePEc:spr:jogath:v:53:y:2024:i:2:d:10.1007_s00182-023-00879-8
    DOI: 10.1007/s00182-023-00879-8
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    References listed on IDEAS

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    More about this item

    Keywords

    Optimal mechanism; Complementary goods; Multi-dimensional private information; Posted-price mechanism;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly

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