Reducing incentive constraints in bidimensional screening

This paper studies screening problems with quasilinear preferences, where agents' private information is two-dimensional and the allocation instrument is one-dimensional. We define a preorder to compare types based on their marginal valuation to the instrument, which facilitates the reduction o...

Full description

Saved in:
Bibliographic Details
Published inJournal of mechanism and institution design (Online) Vol. 8; no. 1; pp. 107 - 150
Main Author Calagua, Braulio
Format Journal Article
LanguageEnglish
Published Society for the Promotion of Mechanism and Institution Design 21.12.2023
Subjects
incentive compatibility
regulation of a monopoly
two-dimensional screening
Online AccessGet full text

Cover

More Information
Summary:This paper studies screening problems with quasilinear preferences, where agents' private information is two-dimensional and the allocation instrument is one-dimensional. We define a preorder to compare types based on their marginal valuation to the instrument, which facilitates the reduction of incentive compatibility constraints that must be checked. With this approach, the discretized problem becomes computationally tractable. As an application, we numerically solve a problem introduced by Lewis & Sappington (1988)
ISSN:2399-844X
2399-8458
DOI:10.22574/jmid.2023.12.005