research-article

Pricing public goods for private sale

Authors:

Michal Feldman,

Brendan Lucier,

Renato Paes LemeAuthors Info & Claims

EC '13: Proceedings of the fourteenth ACM conference on Electronic commerce

Pages 417 - 434

https://doi.org/10.1145/2492002.2482594

Published: 16 June 2013 Publication History

Abstract

We consider the pricing problem faced by a seller who assigns a price to a good that confers its benefits not only to its buyers, but also to other individuals around them. For example, a snow-blower is potentially useful not only to the household that buys it, but also to others on the same street. Given that the seller is constrained to selling such a (locally) public good via individual private sales, how should he set his prices given the distribution of values held by the agents?

We study this problem as a two-stage game. In the first stage, the seller chooses and announces a price for the product. In the second stage, the agents (each having a private value for the good) decide simultaneously whether or not they will buy the product. In the resulting game, which can exhibit a multiplicity of equilibria, agents must strategize about whether they will themselves purchase the good to receive its benefits.

In the case of a fully public good (where all agents benefit whenever any agent purchases), we describe a pricing mechanism that is approximately revenue-optimal (up to a constant factor) when values are drawn from a regular distribution. We then study settings in which the good is only "locally" public: agents are arranged in a network and share benefits only with their neighbors. We describe a pricing method that approximately maximizes revenue, in the worst case over equilibria of agent behavior, for any d-regular network. Finally, we show that approximately optimal prices can be found for general networks in the special case that private values are drawn from a uniform distribution. We also discuss some barriers to extending these results to general networks and regular distributions.

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Cited By

Etesami S(2024)Maximizing Social Welfare Subject to Network Externalities: A Unifying Submodular Optimization ApproachIEEE Transactions on Network Science and Engineering10.1109/TNSE.2024.339718811:5(4860-4874)Online publication date: Sep-2024
https://doi.org/10.1109/TNSE.2024.3397188
Papadimitriou CPeng B(2023)Public goods games in directed networksGames and Economic Behavior10.1016/j.geb.2023.02.002139(161-179)Online publication date: May-2023
https://doi.org/10.1016/j.geb.2023.02.002
Wang LPan YWang Y(2019)Pricing of Public-Utilities-Products under Positive ExternalitiesJournal of Human Resource and Sustainability Studies10.4236/jhrss.2019.7201007:02(137-148)Online publication date: 2019
https://doi.org/10.4236/jhrss.2019.72010
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Index Terms

Pricing public goods for private sale
1. Applied computing
  1. Law, social and behavioral sciences
    1. Economics

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Published In

cover image ACM Conferences

EC '13: Proceedings of the fourteenth ACM conference on Electronic commerce

June 2013

924 pages

ISBN:9781450319621

DOI:10.1145/2492002

General Chair:
Michael Kearns
University of Pennsylvania., USA
,
Program Chairs:
Preston McAfee
Google, USA
,
Éva Tardos
Cornell University, USA

Copyright © 2013 ACM.

Permission to make digital or hard copies of all or part of this work for personal or classroom use is granted without fee provided that copies are not made or distributed for profit or commercial advantage and that copies bear this notice and the full citation on the first page. Copyrights for components of this work owned by others than ACM must be honored. Abstracting with credit is permitted. To copy otherwise, or republish, to post on servers or to redistribute to lists, requires prior specific permission and/or a fee. Request permissions from [email protected]

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SIGecom: Special Interest Group on Economics and Computation

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New York, NY, United States

Publication History

Published: 16 June 2013

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EC '13: ACM Conference on Electronic Commerce

June 16 - 20, 2013

Pennsylvania, Philadelphia, USA

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EC '13 Paper Acceptance Rate 72 of 223 submissions, 32%;

Overall Acceptance Rate 664 of 2,389 submissions, 28%

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Cited By

Etesami S(2024)Maximizing Social Welfare Subject to Network Externalities: A Unifying Submodular Optimization ApproachIEEE Transactions on Network Science and Engineering10.1109/TNSE.2024.339718811:5(4860-4874)Online publication date: Sep-2024
https://doi.org/10.1109/TNSE.2024.3397188
Papadimitriou CPeng B(2023)Public goods games in directed networksGames and Economic Behavior10.1016/j.geb.2023.02.002139(161-179)Online publication date: May-2023
https://doi.org/10.1016/j.geb.2023.02.002
Wang LPan YWang Y(2019)Pricing of Public-Utilities-Products under Positive ExternalitiesJournal of Human Resource and Sustainability Studies10.4236/jhrss.2019.7201007:02(137-148)Online publication date: 2019
https://doi.org/10.4236/jhrss.2019.72010
Xavier Ferreira MWeinberg SHuang DFeamster NChattopadhyay T(2019)Selling a Single Item with Negative ExternalitiesThe World Wide Web Conference10.1145/3308558.3313692(196-206)Online publication date: 13-May-2019
https://dl.acm.org/doi/10.1145/3308558.3313692
Wang XDuan LZhang J(2019)Mobile Social Services with Network Externality: From Separate Pricing to Bundled PricingIEEE Transactions on Network Science and Engineering10.1109/TNSE.2018.28187456:3(379-390)Online publication date: 1-Jul-2019
https://doi.org/10.1109/TNSE.2018.2818745
Fata EAlamdari S(2018)A Game of Public Facilities on Networks2018 IEEE Conference on Decision and Control (CDC)10.1109/CDC.2018.8619359(315-320)Online publication date: Dec-2018
https://doi.org/10.1109/CDC.2018.8619359
Eden AEzra TFeldman MConitzer VGuérin R(2017)Pricing social goodsProceedings of the 12th workshop on the Economics of Networks, Systems and Computation10.1145/3106723.3106733(1-1)Online publication date: 27-Jun-2017
https://dl.acm.org/doi/10.1145/3106723.3106733
Cao ZChen XHu XWang C(2017)Approximation algorithms for pricing with negative network externalitiesJournal of Combinatorial Optimization10.1007/s10878-015-9988-133:2(681-712)Online publication date: 1-Feb-2017
https://dl.acm.org/doi/10.1007/s10878-015-9988-1
Cao ZChen XHu XWang C(2015)Pricing in Social Networks with Negative ExternalitiesComputational Social Networks10.1007/978-3-319-21786-4_2(14-25)Online publication date: 31-Jul-2015
https://doi.org/10.1007/978-3-319-21786-4_2
Munagala KXu X(2014)Value-Based Network Externalities and Optimal Auction DesignWeb and Internet Economics10.1007/978-3-319-13129-0_11(147-160)Online publication date: 2014
https://doi.org/10.1007/978-3-319-13129-0_11
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