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Undivide and Conquer: On Selling a Divisible and Homogeneous Good

Levy Omer (), Smorodinsky Rann () and Tennenholtz Moshe ()
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Levy Omer: Department of Computer Science, Bar-Ilan University, Ramat Gan, Israel
Smorodinsky Rann: Department of Industrial Engineering and Management, Technion – Israel Institute of Technology, Haifa, Israel
Tennenholtz Moshe: Department of Industrial Engineering and Management, Technion – Israel Institute of Technology, Haifa, Israel Microsoft Research, Herzliya, Israel

The B.E. Journal of Theoretical Economics, 2015, vol. 15, issue 1, 1-23

Abstract: With the prevalence of cloud computing emerges the challenges of pricing cloud computing services. There are various characteristics of cloud computing which make the problem unique. We study an abstract model which focuses on one such aspect – the sale of a homogeneous and fully divisible good. We cast onto our model the idea of bundling, studied within the context of monopolist pricing of indivisible goods. We demonstrate how selling a divisible good as an indivisible one may increase seller revenues and characterize when this phenomenon occurs, and the corresponding gain factors.

Keywords: bundling; VCG; auctions (search for similar items in EconPapers)
Date: 2015
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DOI: 10.1515/bejte-2014-0002

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