Market Composition and the Consumer Surplus-Profit Frontier in Monopoly Screening

Panagiotis Kyriazis

Papers from arXiv.org

Abstract: Economic institutions often influence market outcomes not by directly controlling sellers' menus, but by shaping the market composition sellers face. We study the welfare effects of this upstream choice in a monopoly screening model. An upstream actor chooses the distribution of buyer valuations, after which a monopolist screens optimally. We characterize the consumer surplus-profit frontier across market compositions: as the weight on consumer surplus varies, the payoff pair induced by the optimal market composition traces the Pareto frontier. If profit receives at least as much weight as consumer surplus, the optimal market composition collapses to the top type. Otherwise, it exhibits no exclusion, no interior bunching, and a positive mass at the highest valuation. Under a mild curvature condition, the optimal market composition is unique. Greater weight on consumer surplus makes the market less top-heavy: the differentiated interior expands and the premium top segment shrinks.

Date: 2026-04, Revised 2026-05
New Economics Papers: this item is included in nep-com, nep-des, nep-ind and nep-mic
References: View complete reference list from CitEc
Citations:

Downloads: (external link)
http://arxiv.org/pdf/2604.09340 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:2604.09340

Access Statistics for this paper

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