Pricing Novel Goods

Giovannoni, Francesco; Hinnosaar, Toomas

Abstract

Consider a pharmaceutical company (the seller) contemplating supplying a vaccine for a new disease to a health authority (the buyer). The production cost is uncertain ex-ante and unverifiable ex-post. Both parties prefer an early agreement. But an early agreement where the price of the vaccine depended on the seller's claim of her future cost realization may not be credible as the seller cannot commit not to report a higher cost to get better terms. We investigate the seller's dilemma: agreeing to terms before knowing the cost allows an earlier transaction but with the aforementioned commitment problem, while deciding terms after learning the cost solves the commitment problem but at the cost of delay.

Citation

Giovannoni, F., & Hinnosaar, T. (2023, July). Pricing Novel Goods. Presented at EC 2023 - Proceedings of the 24th ACM Conference on Economics and Computation, London, UK

• Presentation Conference Type: Edited Proceedings
• Conference Name: EC 2023 - Proceedings of the 24th ACM Conference on Economics and Computation
• Start Date: Jul 9, 2023
• End Date: Jul 12, 2023
• Acceptance Date: Jul 7, 2023
• Online Publication Date: Jul 7, 2023
• Publication Date: 2023-07
• Deposit Date: Jul 14, 2023
• Publicly Available Date: Jul 27, 2023
• Publisher: Association for Computing Machinery (ACM)
• Pages: 737
• Book Title: EC '23: Proceedings of the 24th ACM Conference on Economics and Computation
• ISBN: 9798400701047
• DOI: https://doi.org/10.1145/3580507.3597694
• Public URL: https://nottingham-repository.worktribe.com/output/23005813
• Publisher URL: https://dl.acm.org/doi/10.1145/3580507.3597694