Computing Candidate Prices in Budget-Constrained Product-Mix Auctions

TL;DR

This paper addresses the challenge of computing optimal prices in budget-constrained product-mix auctions to maximize revenue, extending previous work on social welfare maximization.

Contribution

It proves the correctness of an existing algorithm for revenue maximization in budget-constrained product-mix auctions, highlighting its efficiency in smaller markets.

Findings

Algorithm is correct for revenue maximization

Efficient in smaller markets

Extends product-mix auction analysis

Abstract

We study the problem of computing optimal prices for a version of the Product-Mix auction with budget constraints. In contrast to the ``standard'' Product-Mix auction, the objective is to maximize revenue instead of social welfare. We prove correctness of an algorithm proposed by Paul Klemperer and DotEcon which is sufficiently efficient in smaller markets.