Bundling as an optimal selling mechanism for a multiple-good monopolist

Zero-one mechanisms are generalized take-it-or-leave-it mechanisms that consist of a price for each possible collection of goods. We illustrate that previously suggested conditions for when such mechanisms are optimal in the class of all incentive compatible and individually rational mechanisms are not strong enough. We provide necessary conditions for a schedule of prices to be optimal within the class of take-it-or-leave-it prices. We utilize the linear programming theorem along with these necessary conditions to determine sufficient conditions for when such optimal zero-one mechanisms are optimal mechanisms over the class of all incentive compatible and individually rational mechanisms. We illustrate these conditions in applications to two-good and three-good cases.