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Selling to a continuum of buyers with private values and entry costs

Xin Feng & Jingfeng Lu

Economic Inquiry2026https://doi.org/10.1111/ecin.70058article
AJG 3ABDC A
Weight
0.50

Abstract

This paper studies the revenue‐maximizing selling mechanism with a continuum of buyers who have two‐dimensional private information: valuation and entry cost. Using optimal control methods, we solve this two‐dimensional screening problem with endogenous entry and derive sufficient conditions under which the optimal mechanism is a posted price. These conditions reduce the original problem to a one‐dimensional one in which a buyer's type is net valuation, and the optimal posted price matches that of the transformed environment. Finally, under mild conditions, revenue maximization implies underselling relative to the efficient allocation.

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https://doi.org/https://doi.org/10.1111/ecin.70058

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@article{xin2026,
  title        = {{Selling to a continuum of buyers with private values and entry costs}},
  author       = {Xin Feng & Jingfeng Lu},
  journal      = {Economic Inquiry},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.1111/ecin.70058},
}

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Selling to a continuum of buyers with private values and entry costs

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Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

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