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A General Solution to the Quasi Linear Screening Problem

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  • Rochet, Jean-Charles
  • Carlier, Guillaume
  • Dupuis, Xavier
  • Thanassoulis, John

Abstract

We provide an algorithm for solving multidimensional screening problems which are intractable analytically. The algorithm is a primal-dual algorithm which alternates between optimising the primal problem of the surplus extracted by the principal and the dual problem of the optimal assignment to deliver to the agents for a given surplus. We illustrate the algorithm by solving (i) the generic monopolist price discrimination problem and (ii) an optimal tax problem covering income and savings taxes when citizens differ in multiple dimensions.

Suggested Citation

  • Rochet, Jean-Charles & Carlier, Guillaume & Dupuis, Xavier & Thanassoulis, John, 2024. "A General Solution to the Quasi Linear Screening Problem," TSE Working Papers 24-1537, Toulouse School of Economics (TSE).
    • Handle: RePEc:tse:wpaper:129347
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    More about this item

    Keywords

    Multidimensional screening; algorithm; numerical methods; price discrimination; optimal tax;
    All these keywords.

    JEL classification:

    • C02 - Mathematical and Quantitative Methods - - General - - - Mathematical Economics
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly

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