IDEAS home Printed from https://ideas.repec.org/a/ucp/jpolec/doi10.1086-717894.html
   My bibliography  Save this article

Monopoly Pricing, Optimal Randomization, and Resale

Author

Listed:
  • Simon Loertscher
  • Ellen V. Muir

Abstract

We provide a parsimonious and unified explanation for randomized selling mechanisms widely used in practice yet commonly perceived as puzzling. Optimality of randomization in the form of conflation and rationing implies that revenue under market-clearing pricing is nonconcave. Randomization is implementable via opaque pricing and underpricing. Relative to market-clearing pricing, randomization increases the equilibrium quantity and quality of goods sold and, consequently, may increase consumer surplus. For fixed quantities, resale increases consumer surplus. However, resale can decrease the equilibrium quantity and quality of goods sold. Thus, resale prohibition, which always benefits the seller, may also increase consumer surplus.

Suggested Citation

  • Simon Loertscher & Ellen V. Muir, 2022. "Monopoly Pricing, Optimal Randomization, and Resale," Journal of Political Economy, University of Chicago Press, vol. 130(3), pages 566-635.
    • Handle: RePEc:ucp:jpolec:doi:10.1086/717894
    DOI: 10.1086/717894
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1086/717894
    Download Restriction: Access to the online full text or PDF requires a subscription.
    File URL: http://dx.doi.org/10.1086/717894
    Download Restriction: Access to the online full text or PDF requires a subscription.
    File URL: https://libkey.io/10.1086/717894?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.

    Citations

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


    Cited by:

    1. Dirk Bergemann & Tibor Heumann & Stephen Morris, 2022. "Screening with Persuasion," Papers 2212.03360, arXiv.org.
    2. Dirk Bergemann & Tibor Heumann & Stephen Morris, 2023. "Bidder-Optimal Information Structures in Auctions," Cowles Foundation Discussion Papers 2375, Cowles Foundation for Research in Economics, Yale University.
    3. Kai Hao Yang & Alexander K. Zentefis, 2023. "Extreme Points of First-Order Stochastic Dominance Intervals: Theory and Applications," Cowles Foundation Discussion Papers 2355, Cowles Foundation for Research in Economics, Yale University.
    4. Alexei Parahonyak & Nick Vikander, 2024. "Strategic Use of Product Delays to Shape Word-of-Mouth Communication," Economics Series Working Papers 1032, University of Oxford, Department of Economics.
    5. Sato, Susumu, 2024. "Conflict between consumer and worker surpluses under monopoly power," Economics Letters, Elsevier, vol. 234(C).
    6. Kai Hao Yang & Alexander K. Zentefis, 2023. "Monotone Function Intervals: Theory and Applications," Papers 2302.03135, arXiv.org, revised Apr 2024.
    7. Parakhonyak, Alexei & Vikander, Nick, 2023. "Information design through scarcity and social learning," Journal of Economic Theory, Elsevier, vol. 207(C).

    More about this item

    Statistics

    Access and download statistics

    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:ucp:jpolec:doi:10.1086/717894. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: Journals Division (email available below). General contact details of provider: https://www.journals.uchicago.edu/JPE .

    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.