Optimal selling procedures with fixed costs

Francesca Cornelli*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

21 Scopus citations

Abstract

This paper studies the optimal selling procedures for a monopolist, when consumers valuations are unknown and there are fixed costs. The fixed costs introduce a positive externality among customers: each customer benefits from the presence of others who help cover the fixed costs. In this context it is optimal for the monopolist to make the probability of each individual being served contingent on the valuations of all the other consumers. The monopolist therefore sets a minimum price and then lets each customer contribute as much as he wishes. Journal of Economic Literature Classification Numbers: D44, D82, L31.

Original languageEnglish (US)
Pages (from-to)1-30
Number of pages30
JournalJournal of Economic Theory
Volume71
Issue number1
DOIs
StatePublished - Oct 1996

ASJC Scopus subject areas

  • Economics and Econometrics

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