Non-optimality of state by state monopoly pricing with demand uncertainty: An example

C-Tier
Journal: Economics Letters
Year: 2019
Volume: 183
Issue: C
Pages: -

Score contribution per author:

0.503 = (α=2.01 / 2 authors) × 0.5x C-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

This paper considers a monopoly’s profit maximizing problem, where there is a continuum of consumers with unit demand, and valuations are given by one of two possible demand distributions/states. The firm’s problem is to maximize profits by choosing an optimal mechanism among direct revelation mechanisms that satisfy interim incentive compatibility and ex-post individual rationality. We show that setting the monopoly price in each demand state may not be optimal.

Technical Details

RePEc Handle
repec:eee:ecolet:v:183:y:2019:i:c:9
Journal Field
General
Author Count
2
Added to Database
2026-01-29