Revenue maximization with nonexcludable goods

Mohammadhossein Bateni, Nima Haghpanah, Balasubramanian Sivan, Morteza Zadimoghaddam

Research output: Contribution to journalArticle

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 pointwise optimization problem involved in implementing the revenue optimal mechanism, namely, optimizing over arbitrary profiles of virtual values, is hard to approximate within a factor of Ω(n2-∈) (assuming P ≠ NP) even in star graphs. Furthermore, we show that optimizing the expected revenue is APX-hard. However, in a relevant special case, rooted version with identical distributions, 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.

Original languageEnglish (US)
Article number18
JournalACM Transactions on Economics and Computation
Volume3
Issue number4
DOIs
StatePublished - Jul 1 2015

Fingerprint

Star Graph
Facility Location Problem
Polynomial time
Revenue maximization
Revenue
Optimization Problem
Stars
Sales
Arbitrary
Polynomials
Graph in graph theory
Graph
Factors
Profile
Design
Posted prices
Optimization problem
Price mechanism
Location problem
Facility location

All Science Journal Classification (ASJC) codes

  • Computer Science (miscellaneous)
  • Statistics and Probability
  • Economics and Econometrics
  • Marketing
  • Computational Mathematics

Cite this

Bateni, Mohammadhossein ; Haghpanah, Nima ; Sivan, Balasubramanian ; Zadimoghaddam, Morteza. / Revenue maximization with nonexcludable goods. In: ACM Transactions on Economics and Computation. 2015 ; Vol. 3, No. 4.
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Revenue maximization with nonexcludable goods. / Bateni, Mohammadhossein; Haghpanah, Nima; Sivan, Balasubramanian; Zadimoghaddam, Morteza.

In: ACM Transactions on Economics and Computation, Vol. 3, No. 4, 18, 01.07.2015.

Research output: Contribution to journalArticle

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