Riccardo Faini CEIS Seminars

Selling Complementary goods: Information and Products
October, 12nd 2018 (12:00-13:30)
Room B - 1st floor

Suehyun Kwon (UCL)

Riccardo Faini CEIS Seminars

This paper studies a selling mechanism where the seller fi rst charges a fee for advice (information structure) then sells a product. When the buyer has no private information, the seller can extract full surplus, both when the seller has private information and when he doesn't. If only the buyer has private information, the seller cannot extract full surplus. When both the seller and the buyer have private information, selling advice can strictly increase the probability of trade, and it is welfare-improving for both parties. In the private-value setting,Myerson-Satterthwaite no-trade theorem can be overcome by this mechanism. The paper also characterizes optimal mechanisms for some parameter values.