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Optimal Sales Schemes against Interdependent Buyers

Optimal Sales Schemes against Interdependent Buyers Abstract This paper studies a monopoly pricing problem when the seller can choose the timing of a trade with each buyer, and a buyer's valuation of the seller's good is the weighted sum of his and other buyers' private signals. We show that it is optimal for the seller to employ a sequential scheme that trades with one buyer at a time and allows each buyer to observe the outcomes of all preceding transactions. We also identify conditions under which the seller optimally trades with the buyers in the increasing order of the weights they place on other buyers' signals. (JEL D42 , D82 , L12 ) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Economic Journal: Microeconomics American Economic Association

Optimal Sales Schemes against Interdependent Buyers

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Publisher
American Economic Association
Copyright
Copyright © 2010 by the American Economic Association
Subject
Articles
ISSN
1945-7685
eISSN
1945-7685
DOI
10.1257/mic.2.1.150
Publisher site
See Article on Publisher Site

Abstract

Abstract This paper studies a monopoly pricing problem when the seller can choose the timing of a trade with each buyer, and a buyer's valuation of the seller's good is the weighted sum of his and other buyers' private signals. We show that it is optimal for the seller to employ a sequential scheme that trades with one buyer at a time and allows each buyer to observe the outcomes of all preceding transactions. We also identify conditions under which the seller optimally trades with the buyers in the increasing order of the weights they place on other buyers' signals. (JEL D42 , D82 , L12 )

Journal

American Economic Journal: MicroeconomicsAmerican Economic Association

Published: Feb 1, 2010

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