Paper #624

Títol:

Optimal second-degree price discrimination and arbitrage: On the role of asymetric information among buyers

Autors:

Doh Shin Jeon i Domenico Menicucci

Data:

Novembre 2001

Resum:

The traditional theory of monopolistic screening tackles individual self-selection but does not address the possibility that buyers could form a coalition to coordinate their purchases and to reallocate the goods. In this paper, we design the optimal sale mechanism which takes into account both individual and coalition incentive compatibility focusing on the role of asymmetric information among buyers. We show that when a coalition of buyers is formed under asymmetric information, the monopolist can do as well as when there is no coalition. Although in the optimal sale mechanism marginal rates of substitution are not equalized across buyers (hence there exists room for arbitrage), they fail to realize the gains from arbitrage because of the transaction costs in coalition formation generated by asymmetric information.

Paraules clau:

Monopolistic screening, coalition incentive compatibility, asymetric information, transaction costs

Codis JEL:

D42, D82

Àrea de Recerca:

Microeconomia

Publicat a:

Rand Journal of Economics, vol. 36 (2), 337-360, Summer 2005

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