Optimal
Multiproduct Nonlinear Pricing
with Correlated Consumer Types |
Yossi
Spiegel, Tel Aviv University |
Simon
Wilkie, Caltech |
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Current
version: March 2001 |
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Abstract: We
examine the design of nonlinear prices by a multiproduct monopolist who
serves customers with multidimensional but correlated types. We show
that the monopoly can exploit the correlations between consumers' types
to design pricing mechanisms that fully extract the surplus from each consumer.
Our main insight is that regardless of the dimensionality of the consumers
types and the number of goods that the monopoly produces, the surplus that
each consumer gets from buying is a scalar. Hence, it is possible
to design a two step mechanism where in the first step the monopoly induces
the consumers to make efficient purchasing decisions (given their private
information), and in the second step the monopoly extracts the surplus
from each consumer via a (random) fixed fee. |
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Keywords:
nonlinear prices, multidimensional types, correlated types, incremental
cost, Clarke-Groves mechanism
JEL
Classification Numbers: D42, D82 |
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Last updated: August 23, 2001 |