Abstract
We study large markets with a single seller who can produce many types of goods, and many multi-minded buyers. The seller chooses posted prices for its many items, and the buyers purchase bundles to maximize their utility. For this setting, we consider the following questions: what fraction of the optimum social welfare does a revenue maximizing solution achieve? Are there pricing mechanisms which achieve both good revenue and good welfare simultaneously? To address these questions, we give envy-free pricing schemes which are guaranteed to result in both good revenue and welfare, as long as the buyer valuations for the goods they desire have a nice (although reasonable) structure, e.g., the aggregate buyer demand has a monotone hazard rate or is not too convex. We also show that our pricing schemes have implications for any solution which achieves high revenue: specifically that in many settings, prices that maximize (approximately) profit also result in high social welfare. Our results holds for general multi-minded buyers in large markets with production costs; we also provide improved guarantees for the important special case of unit-demand buyers.
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Notes
- 1.
For convenience, we will use revenue and profit interchangeably in this work.
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Acknowledgements
This work was supported in part by NSF awards CCF-1527497 and CNS-1218374.
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Anshelevich, E., Kar, K., Sekar, S. (2016). Pricing to Maximize Revenue and Welfare Simultaneously in Large Markets. In: Cai, Y., Vetta, A. (eds) Web and Internet Economics. WINE 2016. Lecture Notes in Computer Science(), vol 10123. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-662-54110-4_11
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DOI: https://doi.org/10.1007/978-3-662-54110-4_11
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