Selling two complementary goods

Abstract

A seller is selling a pair of divisible complementary goods to an agent. The agent consumes the goods only in a specific ratio and freely disposes of excess in either good. The value of the bundle and the ratio are the agent’s private information. In this two-dimensional type space model, we characterize the incentive constraints and show that the optimal (expected revenue-maximizing) mechanism is a ratio-dependent posted price or a posted price mechanism for a class of distributions. We also show that the optimal mechanism is a posted price mechanism when the value and the ratio are independently distributed.