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Correlation-Savvy Sellers

  • A multi-product monopolist sells sequentially to a buyer who privately learns his valuations. Using big data, the monopolist learns the intertemporal correlation of the buyer’s valuations. Perfect price discrimination is generally unattainable—even when the seller learns the correlation perfectly, has full commitment, and in the limit where the consumption good about which the buyer has ex ante private information becomes insignificant. This impossibility is due to informational externalities which requires information rents for the buyer’s later consumption. These rents induce upward and downward distortions, violating the generalized no distortion at the top principle of dynamic mechanism design.

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Metadaten
Document Type:Working Paper
Language:English
Author(s):Roland Strausz
Parent Title (English):Berlin School of Economics Discussion Papers
Hertie Collections (Serial Number):Berlin School of Economics Discussion Papers (16)
Publication year:2023
Publishing Institution:Hertie School
Number pages:27
Related URL:https://berlinschoolofeconomics.de/insights/bse-discussion-papers
DOI:https://doi.org/10.48462/opus4-4960
Release Date:2023/05/26
Edition:No. 16
Hertie School Research:BerlinSchoolOfEcon_Discussion_Papers
Licence of document (German):Creative Commons - CC BY - 4.0 International
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