On the Optimality of Pure Bundling for a Monopolist

Doh-Shin Jeon, Domenico Menicucci and Sjaak Hurkens

No 771, Working Papers from Barcelona School of Economics

Abstract: This paper considers a monopolist selling two objects to a single buyer with privately observed valuations. We prove that if each buyer's type has a non-negative virtual valuation for each object, then the optimal price schedule is such that the objects are sold only in a bundle; weaker conditions suffice if valuations are independently and identically distributed. Under somewhat stronger conditions, pure bundling is the optimal sale mechanism among all individually rational and incentive compatible mechanisms.

Keywords: monopoly pricing; price discrimination; multi-dimensional mechanism design; pure bundling (search for similar items in EconPapers)
JEL-codes: D42 D82 L11 (search for similar items in EconPapers)
Date: 2015-09
New Economics Papers: this item is included in nep-com, nep-cta, nep-ind and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Journal Article: On the optimality of pure bundling for a monopolist (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:bge:wpaper:771

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