Allocating Positional Goods: A Mechanism Design Approach

Peiran Xiao

Papers from arXiv.org

Abstract: I study the optimal allocation of positional goods in the presence of externalities arising from consumers' concerns for relative consumption. Using a mechanism design approach, I characterize the externalities by a feasibility condition. I show that the revenue-maximizing mechanism possibly excludes some buyers and fully separates the participants if their type distribution satisfies Myerson's regularity. The seller can guarantee at least half the maximum revenue by offering a single level of positional goods. When there is no exclusion, as the seller offers more positional good levels, the consumer surplus decreases (increases) if the distribution has an increasing (decreasing) failure rate. Higher participation increases the consumer surplus under increasing failure rates. Applications include luxury goods, priority services, education, and organizational hierarchies.

Date: 2024-11, Revised 2025-07
New Economics Papers: this item is included in nep-com and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://arxiv.org/pdf/2411.06285 Latest version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:2411.06285

Access Statistics for this paper

More papers in Papers from arXiv.org
Bibliographic data for series maintained by arXiv administrators ().