Kyriazis, P., "Market Composition and the Surplus Frontier of Monopoly Screening"

Title: "Market Composition and the Surplus Frontier of Monopoly Screening"

Speaker: Dr. Panagiotis Kyriazis, Research Fellow at the European University Institute (EUI)

Host:  Assistant Professor Alexopoulos Angelos, Department of Economics, Athens University of Economics and Business

Room:  76, Patission Str., Antoniadou Wing, 3rd floor, Room A36

Abstract: Economic institutions often influence market outcomes not by controlling sellers' menus, but by shaping the market composition sellers face. We characterize the surplus frontier of monopoly screening when the distribution of buyer valuations is endogenous. An upstream actor chooses this distribution, after which a monopolist offers the optimal quality-price menu. Varying the weight on consumer surplus traces the Pareto frontier: every efficient consumer surplus/profit pair is implemented by a single market composition that is optimal for some weight. If profit receives at least as much weight as consumer surplus, the optimal market collapses to the highest valuation. Otherwise, it features no exclusion, no interior bunching, and a positive premium segment at the highest valuation. More consumer-oriented markets expand the rent-generating interior and shrink the premium top segment, raising consumer surplus while lowering profit and total surplus. When average willingness to pay is exogenously fixed, the weighted problem traces the conditional frontier, and the optimal market composition separates shape from scale. The no-bunching and premium-top segment structure is preserved.