Competitive and Revenue-Optimal Pricing with Budgets

Simon Finster (), Paul Goldberg () and Edwin Lock ()
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Simon Finster: FAIRPLAY - IA coopérative : équité, vie privée, incitations - CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - GENES - Groupe des Écoles Nationales d'Économie et Statistique - X - École polytechnique - IP Paris - Institut Polytechnique de Paris - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - GENES - Groupe des Écoles Nationales d'Économie et Statistique - IP Paris - Institut Polytechnique de Paris - CNRS - Centre National de la Recherche Scientifique - IP Paris - Institut Polytechnique de Paris - Criteo AI Lab - Criteo [Paris] - Centre Inria de l'Institut Polytechnique de Paris - Centre Inria de Saclay - Inria - Institut National de Recherche en Informatique et en Automatique, CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - GENES - Groupe des Écoles Nationales d'Économie et Statistique - X - École polytechnique - IP Paris - Institut Polytechnique de Paris - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - GENES - Groupe des Écoles Nationales d'Économie et Statistique - IP Paris - Institut Polytechnique de Paris - CNRS - Centre National de la Recherche Scientifique
Paul Goldberg: Departement of Computer of Science University of Oxford - University of Oxford
Edwin Lock: Departement of Computer of Science University of Oxford - University of Oxford

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Abstract: In markets with budget-constrained buyers, competitive equilibria need not be efficient in the utilitarian sense, or maximise the seller's revenue. We consider a setting with multiple divisible goods. Competitive equilibrium outcomes, and only those, are constrained utilitarian efficient, a notion of utilitarian efficiency that respects buyers' demands and budgets. Our main contribution establishes that, when buyers have linear valuations, competitive equilibrium prices are unique and revenue-optimal for a zero-cost seller.

Keywords: budget constraints; Fisher markets; product-mix auctions; arctic auction; market design; efficiency; revenue maximisation; competitive equilibrium (search for similar items in EconPapers)
Date: 2025
New Economics Papers: this item is included in nep-com, nep-des, nep-mic and nep-upt
Note: View the original document on HAL open archive server: https://hal.science/hal-05234001v1
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Published in Theoretical Economics, inPress

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05234001

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