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Competing mechanisms with multi-unit consumer demand

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  • Peck, James
Abstract
The competing mechanisms literature is extended to a market setting in which firms have fixed capacity, and there is a continuum of consumers who desire multiple units and can only purchase from one firm. Firms choose incentive compatible mechanisms in which consumers report their utility types; consumption of the good and payments of the numeraire are continuous functions of the reports. Uniform price auctions with reserve prices, reinterpreted as direct mechanisms, are not consistent with equilibrium. However, modified auctions without reserve prices but with type-specific entry fees do constitute an equilibrium of the competing mechanisms game under additional regularity assumptions. When all firms announce fixed prices at the perfectly competitive level, this profile also constitutes an equilibrium of the competing mechanisms game.

Suggested Citation

  • Peck, James, 2018. "Competing mechanisms with multi-unit consumer demand," Journal of Economic Theory, Elsevier, vol. 177(C), pages 126-161.
    • Handle: RePEc:eee:jetheo:v:177:y:2018:i:c:p:126-161
    DOI: 10.1016/j.jet.2018.06.001
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    References listed on IDEAS

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    2. de Meza, David & Reito, Francesco, 2020. "Too much waste, not enough rationing: The failure of stochastic, competitive markets," Journal of Economic Theory, Elsevier, vol. 188(C).

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    More about this item

    Keywords

    Competing mechanisms; Multi-unit demand; Entry fees;
    All these keywords.

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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