Selling two complementary goods

Komal Malik () and Kolagani Paramahamsa ()
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Komal Malik: Indian Statistical Institute
Kolagani Paramahamsa: Indian Statistical Institute

International Journal of Game Theory, 2024, vol. 53, issue 2, No 6, 423-447

Abstract: Abstract A seller is selling a pair of divisible complementary goods to an agent. The agent consumes the goods only in a specific ratio and freely disposes of excess in either good. The value of the bundle and the ratio are the agent’s private information. In this two-dimensional type space model, we characterize the incentive constraints and show that the optimal (expected revenue-maximizing) mechanism is a ratio-dependent posted price or a posted price mechanism for a class of distributions. We also show that the optimal mechanism is a posted price mechanism when the value and the ratio are independently distributed.

Keywords: Optimal mechanism; Complementary goods; Multi-dimensional private information; Posted-price mechanism (search for similar items in EconPapers)
JEL-codes: D40 D42 D82 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s00182-023-00879-8

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