Maximal Revenue with Multiple Goods: Nonmonotonicity and Other
Observations
Sergiu Hart and Philip J. Reny
(*) Misprint:
-
Page 906, footnote 30: Replace all occurrences of
x10
with x̃1
Abstract
Consider the problem of maximizing the revenue from selling a number of
goods to a single buyer. We show that, unlike the case of one good, when
the buyer's values for the goods increase the seller's maximal revenue
may well decrease. We then identify two circumstances where monotonicity
does obtain: when optimal mechanisms are deterministic and symmetric,
and when they have submodular prices. Next, through simple and
transparent examples, we clarify the need for and the advantage of
randomization when maximizing revenue in the multiple-good versus the
one-good case. Finally, we consider "seller-favorable" mechanisms, the
only ones that matter when maximizing revenue. They are essential for
our positive monotonicity results, and they also circumvent well-known
nondifferentiability issues.
- First version: June 2011
- Theoretical Economics 10 (2015), 3, 893-922
Last modified:
© Sergiu Hart