• Economics
  • Published 2006

Optimal Mechanism for Selling Substitutes

  title={Optimal Mechanism for Selling Substitutes},
  author={Gregory Pavlov},
We study a problem of a multiproduct monopolist selling substitutable goods to a buyer with unknown valuations. Under the standard distributional assumptions we find that in the optimal menu every nontrivial contract delivers some good with certainty. Using this result we apply control-theoretic tools to the case of two goods and solve a number of examples. The optimal menus generally have a simple structure and sometimes are substantially more profitable than the deterministic menus. We also… CONTINUE READING