All Solution Graphs in Multidimensional Screening
Babu Nahata () and
Journal of the New Economic Association, 2011, issue 11, 10-38
We study general discrete-types multidimensional screening without any noticeable restrictions on valuations, using instead epsilon-relaxation of the incentivecompatibility constraints. Any active (becoming equality) constraint can be perceived as "envy" arc from one type to another, so the set of active constraints is a digraph. We find that: (1) any solution has an in-rooted acyclic graph ("river"); (2) for any logically feasible river there exists a screening problem resulting in such river. Using these results, any solution is characterized both through its spanning-tree and through its Lagrange multipliers, that can help in finding solutions and their efficiency/distortion properties.
Keywords: incentive compatibility; multidimensional screening; second-degree price discrimination; non-linear pricing; graphs (search for similar items in EconPapers)
JEL-codes: D42 D82 L10 L12 L40 (search for similar items in EconPapers)
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Working Paper: All solution graphs in multidimensional screening (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:nea:journl:y:2011:i:11:p:10-38
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