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

摘要

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. (C) 2019 Elsevier B.V. All rights reserved.