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Title:Optimal multiproduct nonlinear pricing with correlated consumer types PDF Logo
Authors:Spiegel, Yossi
Wilkie, Simon
Issue Date:2000
Series/Report no.:Discussion paper // Center for Mathematical Studies in Economics and Management Science 1299
Abstract:We examine the design of nonlinear prices by a multiproduct monopolist who serves customers with multidimensional but correlated types. We show that the monopoly can exploit the correlations between consumers' types to design pricing mechanisms that fully extract the surplus from each consumer. Our main insight is that regardless of the dimensionality of the consumers types and the number of goods that the monopoly produces, the surplus that each consumer gets from buying is a scalar. Hence, it is possible to design a two step mechanism where in the first step the monopoly induces the consumers to make efficient purchasing decisions (given their private information), and in the second step the monopoly extracts the surplus from each consumer via a (random) fixed fee.
Subjects:nonlinear prices
multidimensional types
correlated types
incremental cost
Clarke-Groves mechanisms
JEL:D42
D82
Document Type:Working Paper
Appears in Collections:Discussion Papers, Kellogg School of Management, Northwestern University

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