Multidimensional mechanism design: Revenue maximization and the multiple-good monopoly

Alejandro Manelli, Daniel R. Vincent

Research output: Contribution to journalArticle

79 Scopus citations

Abstract

The seller of N distinct objects is uncertain about the buyer's valuation for those objects. The seller's problem, to maximize expected revenue, consists of maximizing a linear functional over a convex set of mechanisms. A solution to the seller's problem can always be found in an extreme point of the feasible set. We identify the relevant extreme points and faces of the feasible set. We provide a simple algebraic procedure to determine whether a mechanism is an extreme point. We characterize the mechanisms that maximize revenue for some well-behaved distribution of buyer's valuations.

Original languageEnglish (US)
Pages (from-to)153-185
Number of pages33
JournalJournal of Economic Theory
Volume137
Issue number1
DOIs
StatePublished - Nov 1 2007

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Keywords

  • Adverse selection
  • Extreme point
  • Faces
  • Incentive compatibility
  • Mechanism design
  • Monopoly pricing
  • Multidimensional screening
  • Non-linear pricing

ASJC Scopus subject areas

  • Economics and Econometrics

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