Optimal Coordination and Pricing of a Network under Incomplete Information

A monopolist sells a good whose value depends on the set (network) of buyers who adopt it as well as on their private types. This paper studies the seller’s revenue maximization in this problem when he coordinates the buyers’ adoption decisions based on their reported types. We characterize ex post implementable sales schemes, and identify the conditions under which the revenue maximizing scheme has the properties that a larger network is more affordable than a smaller network, and that the network size is maximized subject to the participation constraints.