Search behavior of the multiproduct monopolist: Experimental results

Abstract

Subjects in the role of multiproduct monopolists are observed in markets where demand is initially unknown. In each market period, the seller must choose between selling each good individually or selling a bundle containing one unit of each good. The fact that individual and collective reservation prices (demand) are initially unknown complicate this choice. As such information is paramount in determining the relative profitability of the two sales strategies, the multiproduct monopolist finds it profitable to search across various offer prices. A seller accumulates this information during a costless “practice” phase, then enters a ‘market” phase where profits or losses have pecuniary rewards. Results indicate that a multiproduct monopolist is often able to select the more profitable sales strategy.

Citation

Kelly, F.S. (2001), "Search behavior of the multiproduct monopolist: Experimental results", Research in Experimental Economicss (Research in Experimental Economics, Vol. 8), Emerald Group Publishing Limited, Leeds, pp. 117-152. https://doi.org/10.1016/S0193-2306(01)08007-3