Selling Two Identical Objects

Sushil Bikhchandani and Debasis Mishra

Papers from arXiv.org

Abstract: It is well-known that optimal (i.e., revenue-maximizing) selling mechanisms in multidimensional type spaces may involve randomization. We obtain conditions under which deterministic mechanisms are optimal for selling two identical, indivisible objects to a single buyer. We analyze two settings: (i) decreasing marginal values (DMV) and (ii) increasing marginal values (IMV). Thus, the values of the buyer for the two units are not independent. We show that under a well-known condition on distributions~(due to McAfee and McMillan (1988)), (a) it is optimal to sell the first unit deterministically in the DMV model and (b) it is optimal to bundle (which is a deterministic mechanism) in the IMV model. Under a stronger sufficient condition on distributions, a deterministic mechanism is optimal in the DMV model. Our results apply to heterogeneous objects when there is a specified sequence in which the two objects must be sold.

Date: 2020-09, Revised 2021-08
New Economics Papers: this item is included in nep-des and nep-mic
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Published in Journal of Economic Theory, 200 (2022), 105397

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Journal Article: Selling two identical objects (2022)
Working Paper: Selling Two Identical Objects (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:2009.11545

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