Competitive Nonlinear Pricing under Adverse Selection

Andrea Attar (), Thomas Mariotti () and François Salanié ()
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Andrea Attar: TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - Comue de Toulouse - Communauté d'universités et établissements de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, Università degli Studi di Roma Tor Vergata [Roma, Italia] = University of Rome Tor Vergata [Rome, Italy] = Université de Rome Tor Vergata [Rome, Italie]
Thomas Mariotti: TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - Comue de Toulouse - Communauté d'universités et établissements de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement
François Salanié: TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - Comue de Toulouse - Communauté d'universités et établissements de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement

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Abstract: This article surveys recent attempts at characterizing competitive allocations under adverse selection when each informed agent can privately trade with several uninformed parties: that is, trade is nonexclusive. We first show that requiring market outcomes to be robust to entry selects a unique candidate allocation, which involves cross subsidies. We then study how to implement this allocation as the equilibrium outcome of a game in which the uninformed parties, acting as principals, compete by making offers to the informed agents. We show that equilibria typically fail to exist in competitive-screening games, in which these offers are simultaneous. We finally explore alternative extensive forms, and show that the candidate allocation can be implemented through a discriminatory ascending auction. These results yield sharp predictions for competitive nonexclusive markets.

Keywords: Ascending Auctions; Markets; Nonexclusive; Discriminatory Pricing; Entry-Proofness; Adverse Selection (search for similar items in EconPapers)
Date: 2025-11-30
Note: View the original document on HAL open archive server: https://hal.science/hal-05353285v1
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Published in Advances in Economics and Econometrics, Advances in Economics and Econometrics, 2025, 978 1 009 53132 0

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