Econometrica: Mar, 1985, Volume 53, Issue 2

Optimal Selling Strategies under Uncertainty for a Discriminating Monopolist when Demands are Interdependent

https://doi.org/0012-9682(198503)53:2<345:OSSUUF>2.0.CO;2-6
p. 345-362

Jacques Cremer, Richard P. McLean

This paper deals with the optimal design of resource allocation mechanisms in the presence of asymmetric information. A buyer's valuation function is allowed to depend on the characteristics of other buyers as well as his own and sufficient conditions are provided under which the seller can extract the full surplus from the buyers in an "ex post Nash" equilibrium. The result is then applied to the important problem of optimal auction design.