Selling two complementary goods

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

Discussion Papers from Indian Statistical Institute, Delhi

Abstract: A seller is selling a pair of complementary goods to an agent. The agent consumes the goods only in a certain ratio and freely disposes of excess in either of the goods. The value of the bundle and the ratio are private information of the agent. 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 mechanism for a class of distributions; that is, it has a di↵erent posted price for each ratio report. We identify additional sufficient conditions on the joint distribution for a posted price to be an optimal mechanism. We also show that the optimal mechanism is a posted price mechanism when the value and the ratio types are independently distributed.

Keywords: optimal mechanism; complementary goods; multidimensional private information; posted-price mechanism (search for similar items in EconPapers)
JEL-codes: D40 D42 D82 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2021-02
New Economics Papers: this item is included in nep-des, nep-mic and nep-ore
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