Market Composition and the Consumer Surplus-Profit Frontier in Monopoly Screening

Panagiotis Kyriazis

Home/Archive/arXiv

arXiv · 2604.09340

Market Composition and the Consumer Surplus-Profit Frontier in Monopoly Screening

Panagiotis Kyriazis

View original source ↗Read source document ↗Export metadata ↓

Abstract

Economic institutions often influence market outcomes not by directly controlling sellers' menus, but by shaping the market composition sellers face. We study the welfare effects of this upstream choice in a monopoly screening model. An upstream actor chooses the distribution of buyer valuations, after which a monopolist screens optimally. We characterize the consumer surplus-profit frontier across market compositions: as the weight on consumer surplus varies, the payoff pair induced by the optimal market composition traces the Pareto frontier. If profit receives at least as much weight as consumer surplus, the optimal market composition collapses to the top type. Otherwise, it exhibits no exclusion, no interior bunching, and a positive mass at the highest valuation. Under a mild curvature condition, the optimal market composition is unique. Greater weight on consumer surplus makes the market less top-heavy: the differentiated interior expands and the premium top segment shrinks.

Explore related subjects

econ.TH

Keep this discovery

Explore connections, maps & timelines

BibTeX RIS

Panagiotis Kyriazis. 2026-05-03. Market Composition and the Consumer Surplus-Profit Frontier in Monopoly Screening. https://arxiv.org/abs/2604.09340

Cite the original work for its findings. Save a collection to share your selection of sources.

KEEP EXPLORING

Related papers

arXiv2026

Constraint Preferences: Inattention and Aggregation

We study robust decision problems when individuals have maxmin preferences whose belief sets are neighborhoods around reference models, commonly known as "constraint preferences." We first show that a more disciplined form of rationally inattentive behavior is equivalent to the behavior implied by a subclass of constraint preferences. We then introduce an aggregation principle that requires collective beliefs to satisfy every individual's constraint. This requirement links collective beliefs to the information-processing technologies that generate individual constraints. Applications reveal how these technologies determine asset prices, when prediction-market prices become self-confirming, and how much dynamic mechanisms can reduce information rents.

econ.TH↗

arXiv2026

Complementary Information Sources

A decision maker may have several information sources available and choose which one to consult only after learning the decision problem she faces. When is one such set of sources uniformly more valuable than another? For unrestricted Bayesian decision problems, we show that the answer can be stated entirely in terms of Blackwell comparisons. Form a tagged mixture by drawing a source independently of the state and revealing both its identity and its signal. One source set is more valuable in every decision problem if and only if each tagged mixture of the second source set is Blackwell dominated by some tagged mixture of the first. The result applies to compact, possibly infinite source sets and general signal spaces. It also has an exact quantitative counterpart: the largest normalized value shortfall is the directed Le Cam deficiency between the source sets' tagged hulls. The analogous program for monotone decision problems reveals a boundary. We call the passage from problem-by-problem source-set superiority to a problem-independent pairwise dominance a lifting. The Blackwell lifting does not extend directly to the Lehmann order: mixing sources that individually satisfy the monotone likelihood ratio property (MLRP) need not preserve MLRP, and even when it does, no fixed Lehmann-dominating mixture need exist. Requiring one source to serve a finite bundle of monotone decision problems restores the equivalence.

econ.TH↗

arXiv2026

On dynamic price formation in the course of capital reallocation driven by differential rates of profit: strict conservation of value supports Karl Marx's theory

We develop a dynamic three-sector model in which Marx's aggregate equalities (total price equals total value and total profit equals total surplus value) are treated as strict conservation constraints throughout capital reallocation and technical diffusion. Three price-value coefficients are determined by the two aggregate equalities and a closure that sets one sector's price-based profit rate equal to the contemporaneous value-based average (the anchor). Before innovation, capital inflow expands the receiving sector's output and, under both anchors, lowers its unit price and excess profitability. This endogenous fall in price as output rises supports a two-timescale reading: demand-related price movements may precede slower adjustment through capital mobility. A labour-saving, capital-intensifying innovation generates temporary extra surplus value, revalues committed capital, and changes the economy-wide profit rate. At constant real wages, the final uniform rate rises, consistent with Okishio's theorem. When real wages rise sufficiently to keep aggregate exploitation approximately constant, the organic composition increases and the final rate falls. Strict aggregate conservation is computationally coherent and yields distinct transitional predictions under explicit closure and wage assumptions.

econ.TH↗