Monopoly with Incomplete Information
Volume: Volume 15, No. 2
Issue: Summer 1984
Pages: pp. 171-196
Authors: Eric Maskin and John Riley
Title: Monopoly with Incomplete Information
Abstract: Recent theoretical research on principal-agent relationships has emphasized incentive problems that arise when the parties involved are constrained by either asymmetric information or their inability to monitor each other's actions. Here we concentrate on the former constraint and consider the case of a single principal (the monopolist). The main contribution is to show that, under a separability assumption, strong conclusions can be drawn about the nature of optimal incentive schemes. Although the primary focus is on optimal quantity discounts in a monopolized market, the results also shed light on related topics, such as optimal income taxation and commodity bundling.
JEL Classification
Microeconomics Theory of Firm and Industry under Imperfectly Competitive Market Structures (0226)
Microeconomics Agent Theory (0228)
Theory of Uncertainty and Information (0261)