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Reducing incentive constraints in bidimensional screening

Braulio Calagua ()

MPRA Paper from University Library of Munich, Germany

Abstract: This paper studies screening problems with quasilinear preferences, where agents' private information is two-dimensional and the allocation instrument is one-dimensional. A pre-order in the set of types is defined comparing types by their marginal valuation for the instrument, which allows reducing the incentive compatibility constraints that must be checked. With this approach, the discretized problem becomes computationally tractable. As an application, it is numerically solved an example from Lewis and Sappington [Lewis, T. and Sappington, D. E., 1988. Regulating a monopolist with unknown demand and cost functions. The RAND Journal of Economics, 438-457].

Keywords: two-dimensional screening; Spence-Mirrlees condition; incentive compatibility; regulation of a monopoly. (search for similar items in EconPapers)
JEL-codes: C69 D82 L51 (search for similar items in EconPapers)
Date: 2018, Revised 2020
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https://mpra.ub.uni-muenchen.de/101966/1/MPRA_paper_101966.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/108046/1/MPRA_paper_101966.pdf revised version (application/pdf)
https://mpra.ub.uni-muenchen.de/108046/8/MPRA_paper_108046.pdf revised version (application/pdf)

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