Abstract
We study the design of revenue maximizing mechanisms for selling nonexcludable public goods. In particular, we study revenue maximizing mechanisms in Bayesian settings for facility location problems on graphs where no agent can be excluded from using a facility that has been constructed. We show that the optimization problem involved in implementing the revenue optimal mechanism is hard to approximate within a factor of Ω(n 2 − ε) (assuming P ≠ NP) even in star graphs, and that even in expectation over the valuation profiles, the problem is APX-hard. However, in a relevant special case we construct polynomial time truthful mechanisms that approximate the optimal expected revenue within a constant factor. We also study the effect of partially mitigating nonexcludability by collecting tolls for using the facilities. We show that such “posted-price” mechanisms obtain significantly higher revenue, and often approach the optimal revenue obtainable with full excludability.
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Bateni, M., Haghpanah, N., Sivan, B., Zadimoghaddam, M. (2013). Revenue Maximization with Nonexcludable Goods. In: Chen, Y., Immorlica, N. (eds) Web and Internet Economics. WINE 2013. Lecture Notes in Computer Science, vol 8289. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-45046-4_5
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DOI: https://doi.org/10.1007/978-3-642-45046-4_5
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