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Multidimensional screening under nonlinear costs: Limits of standard approach

Sergey Kokovin, Babu Nahata () and Evgeny Zhelobodko

Economics Letters, 2010, vol. 107, issue 2, 263-265

Abstract: We generalize the usual screening approach and conditions for efficiency-at-the-top and acyclic property from linear to fixed-plus-separable or concave costs and multidimensional commodities. But under non-concave costs, like capacity constraints, an example shows a cycle in the solution graph. The cycle makes the standard screening solution non-implementable and approach inadequate.

Keywords: Nonlinear; pricing; Screening; Graphs; Capacity; constraints; Increasing; returns (search for similar items in EconPapers)
Date: 2010
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Handle: RePEc:eee:ecolet:v:107:y:2010:i:2:p:263-265