Allocating Positional Goods: A Mechanism Design Approach

Peiran Xiao

Papers from arXiv.org

Abstract: I study the optimal allocation of positional goods, where consumers' concern for relative consumption creates externalities. Applications include luxury goods, priority services, education, and organizational hierarchies. Using a mechanism design approach, I characterize feasible allocations through a majorization condition. Under Myerson regularity, the revenue-maximizing mechanism fully separates participating buyers, with possible exclusion at the bottom. Selling a single level guarantees at least half the maximum revenue. When all buyers are served, restricting the seller to a single level increases consumer surplus under an increasing failure rate (IFR). When the seller is restricted to a single level, expanding coverage also benefits consumers under IFR but may harm them otherwise. I also characterize the welfare-maximizing mechanism with and without subsidies.

Date: 2024-11, Revised 2026-07
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)
https://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 ().