On the optimality of pure bundling for a monopolist

Menicucci, Domenico; Hurkens, Sjaak; Jeon, Doh‐Shin

doi:10.1016/j.jmateco.2015.06.011

Cited by 27 publications

(21 citation statements)

References 18 publications

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“…One line of work shows that for discrete distributions the optimal mechanism can be found by linear programming in rather general settings: Briest, Chawla, Kleinberg, and Weinberg (2010/2015), Cai, Daskalakis, and Weinberg (2012a), Alaei, Fu, Haghpanah, Hartline, and Malekian (2012). Another line of work deals with optimal mechanisms for multiple goods in various settings: Daskalakis, Deckelbaum, and Tzamos (2013, 2014, Giannakopoulos (2014), Giannakopoulos and Koutsoupias (2014), Menicucci, Hurkens, and Jeon (2015), Tang and Wang (2017). Yet another line of work attempts to approximate the optimal revenue by simple mechanisms in various settings, where simplicity is defined qualitatively: Chawla, Hartline, and Kleinberg (2007), Chawla, Hartline, Malec, and Sivan (2010), , Alaei, Fu, Haghpanah, Hartline, and Malekian (2012), Cai, Daskalakis, and Weinberg (2012b).…”

Section: Literaturementioning

confidence: 99%

The menu-size complexity of auctions

Hart¹,

Nisan²

2013

Proceedings of the Fourteenth ACM Conference on Electronic Commerce

160

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We consider the menu size of mechanisms as a measure of their complexity, and study how it relates to revenue extraction capabilities. Our setting has a single revenue-maximizing seller selling a number of goods to a single buyer whose private values for the goods are drawn from a possibly correlated known distribution, and whose valuation is additive over the goods. We show that when there are two (or more) goods, simple mechanisms of bounded menu size-such as selling the goods separately, or as a bundle, or deterministically-may yield only a negligible fraction of the optimal revenue. We show that the revenue increases at most linearly in menu size, and exhibit valuations for

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Section: Literaturementioning

confidence: 99%

The menu-size complexity of auctions

Hart¹,

Nisan²

2013

Proceedings of the Fourteenth ACM Conference on Electronic Commerce

160

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“…Menicucci et al. () present conditions on “virtual valuation” functions under which the optimal sale mechanism for two products takes the format of a pure bundle. Daskalakis et al.…”

Section: Introductionmentioning

confidence: 99%

“…For instance, Manelli and Vincent (2006) find conditions for optimal mixed bundling of two or more products that are expressed as constraints on valuation distributions. Menicucci et al (2015) present conditions on "virtual valuation" functions under which the optimal sale mechanism for two products takes the format of a pure bundle. Daskalakis et al (2017) use a duality-based framework to find the necessary and sufficient conditions for pure bundling to be the optimal sale mechanism of any number of multiple products that entail stochastic dominance between some specific measures induced by valuation distributions.…”

Section: Introductionmentioning

confidence: 99%

Platform Pricing in Mixed Two‐sided Markets

Gao

2018

Int Economic Review

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When a consumer can appear on both sides of a two‐sided market, such as a user who both buys and sells on eBay, the platform may want to bundle the services it provides to two sides. I develop a general model for such “mixed” two‐sided markets and show that a monopolist platform's incentive to bundle and its optimal pricing strategy are determined by simple formulas using familiar price elasticities of demand, which embody the bundling effect, and price‐cost margins adjusted for network externalities, which incorporate “two‐sidedness.” The optimal pricing rule in such markets generalizes the familiar Lerner formula.

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“…Hart and Nisan [HN14], Menicucci et al [MHJ15] and Haghpanah and Hartline [HH15] provide sufficient conditions for the grand-bundling mechanism to be optimal. Manelli and Vincent [MV06] provide conditions for the optimality of more complex deterministic mechanisms and, similarly, [DDT13,GK14] provide sufficient conditions for the optimality of general (possibly randomized) mechanisms.…”

Section: Introductionmentioning

confidence: 99%

Strong Duality for a Multiple-Good Monopolist

Daskalakis

Deckelbaum

Tzamos

2015

Proceedings of the Sixteenth ACM Conference on Economics and Computation

148

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We characterize optimal mechanisms for the multiple-good monopoly problem and provide a framework to find them. We show that a mechanism is optimal if and only if a measure µ derived from the buyer's type distribution satisfies certain stochastic dominance conditions. This measure expresses the marginal change in the seller's revenue under marginal changes in the rent paid to subsets of buyer types. As a corollary, we characterize the optimality of grand-bundling mechanisms, strengthening several results in the literature, where only sufficient optimality conditions have been derived. As an application, we show that the optimal mechanism for n independent uniform items each supported on [c, c + 1] is a grand-bundling mechanism, as long as c is sufficiently large, extending Pavlov's result for 2 items [Pav11]. At the same time, our characterization also implies that, for all c and for all sufficiently large n, the optimal mechanism for n independent uniform items supported on [c, c + 1] is not a grand bundling mechanism.

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On the optimality of pure bundling for a monopolist

Cited by 27 publications

References 18 publications

The menu-size complexity of auctions

The menu-size complexity of auctions

Platform Pricing in Mixed Two‐sided Markets

Strong Duality for a Multiple-Good Monopolist

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