Monopoly with resale

Giacomo Calzolari*, Alessandro Pavan

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

45 Scopus citations

Abstract

We examine the intricacies associated with the design of revenue-maximizing mechanisms for a monopolist who expects her buyers to resell. We consider two cases: resale to a third party who does not participate in the primary market and interbidder resale, where the winner resells to the losers. To influence the resale outcome, the monopolist must design an allocation rule and a disclosure policy that optimally fashion the beliefs of the participants in the secondary market. Our results show that the revenue-maximizing mechanism may require a stochastic selling procedure and a disclosure policy richer than the simple announcement of the decision to sell to a particular buyer.

Original languageEnglish (US)
Pages (from-to)362-375
Number of pages14
JournalRAND Journal of Economics
Volume37
Issue number2
DOIs
StatePublished - Jan 1 2006

ASJC Scopus subject areas

  • Economics and Econometrics

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