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The B.E. Journal of Theoretical Economics

Editor-in-Chief: Schipper, Burkhard

Ed. by Fong, Yuk-fai / Peeters, Ronald / Puzzello , Daniela / Rivas, Javier / Wenzelburger, Jan


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Online
ISSN
1935-1704
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Profit-Maximizing Sale of a Discrete Public Good via the Subscription Game in Private-Information Environments

Stefano Barbieri1 / David A. Malueg2

1Tulane University,

2University of California - Riverside,

Citation Information: The B.E. Journal of Theoretical Economics. Volume 10, Issue 1, ISSN (Online) 1935-1704, DOI: 10.2202/1935-1704.1575, February 2010

Publication History

Published Online:
2010-02-10

We analyze a symmetric Bayesian game in which two players individually contribute to fund a discrete public good; contributions are refunded if they do not reach a threshold set by the seller of the good. We characterize the distributions of players' private values that can support a symmetric equilibrium in continuous piecewise-linear strategies, and we calculate these strategies. Allowing the seller to charge an entry fee before players make their private contributions, we show these piecewise-linear equilibrium strategies maximize the seller's expected profit over all incentive compatible selling mechanisms.

Keywords: discrete public good; subscription game; revelation principle

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