Competitive and Revenue-Optimal Pricing with Budgets

2023/10/05 by Simon Finster, Paul W. Goldberg, Finster, Simon +3 · 3 citations
Economics, Econometrics and Finance · Decision Sciences · Social Sciences · #Economic theories and models #Auction Theory and Applications #Experimental Behavioral Economics Studies

paper · pdf · doi:10.48550/arxiv.2310.03692

Abstract

In markets with budget-constrained buyers, competitive equilibria need not be efficient in the utilitarian sense, or maximise the seller's revenue. We consider a setting with multiple divisible goods. Competitive equilibrium outcomes, and only those, are constrained utilitarian efficient, a notion of utilitarian efficiency that respects buyers' demands and budgets. Our main contribution establishes that, when buyers have linear valuations, competitive equilibrium prices are unique and revenue-optimal for a zero-cost seller.

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