Allocating Positional Goods: A Mechanism Design Approach
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arXiv
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| Format: | Preprint |
| Published: |
2024
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| _version_ | 1866912636869804032 |
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| author | Xiao, Peiran |
| author_facet | Xiao, Peiran |
| contents | I study the optimal allocation of positional goods in the presence of externalities arising from consumers' concerns about relative consumption. Applications include luxury goods, priority services, education, and organizational hierarchies. Using a mechanism-design approach, I characterize the set of feasible allocations through a majorization condition. The revenue-maximizing mechanism possibly excludes some buyers and fully separates participants under Myerson's regularity condition. The seller can guarantee at least half the maximum revenue by offering a single good. Without exclusion, offering more levels of goods decreases (increases) consumer surplus under increasing (decreasing) failure rates. Higher participation raises consumer surplus under increasing failure rates. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2411_06285 |
| institution | arXiv |
| publishDate | 2024 |
| record_format | arxiv |
| spellingShingle | Allocating Positional Goods: A Mechanism Design Approach Xiao, Peiran Theoretical Economics I study the optimal allocation of positional goods in the presence of externalities arising from consumers' concerns about relative consumption. Applications include luxury goods, priority services, education, and organizational hierarchies. Using a mechanism-design approach, I characterize the set of feasible allocations through a majorization condition. The revenue-maximizing mechanism possibly excludes some buyers and fully separates participants under Myerson's regularity condition. The seller can guarantee at least half the maximum revenue by offering a single good. Without exclusion, offering more levels of goods decreases (increases) consumer surplus under increasing (decreasing) failure rates. Higher participation raises consumer surplus under increasing failure rates. |
| title | Allocating Positional Goods: A Mechanism Design Approach |
| topic | Theoretical Economics |
| url | https://arxiv.org/abs/2411.06285 |