Essays in nonlinear pricing and rent seeking

This thesis consists of three self-contained essays on nonlinear pricing and rent-seeking. In the first chapter of the thesis, I provide new theoretical insights about non-linear pricing in monopoly and common agency by combining the principal-agent framework with other-regarding preferences. I introduce a new theoretical model that separately characterizes status-seeker and inequity-averse buyers. I show how the buyer’s optimal choice of quality and market inefficiency change when the buyer has other-regarding preferences. In the second chapter, I find the optimal productive rent-seeking and sabotaging efforts when the prize is endogenous. I show that due to the existence of endogeneity, sabotaging the productive rent-seeking efforts causes sabotaging the endogenous part of the prize, which can affect the rent-seeking efforts. Moreover, I introduce social preferences into my model and characterize symmetric productive rent-seeking and sabotaging efforts. In the last chapter, I propose a new theoretical model regarding information disclosure with Bayesian persuasion in rent-seeking contests when the efforts are productive. I show that under one-sided incomplete information, information disclosure decision depends on both the marginal costs of efforts and the marginal benefit of aggregate exerted effort. I find that since the efforts are productive and add a positive surplus on the fixed rent, my model narrows down the conditions for the information disclosure compared to the exogenous model. Under the two-sided incomplete information case, I observe that there is a non-monotone relationship between optimal effort and posterior beliefs. Thus, it might be difficult to conclude whether a contest organizer should disclose any information to contestants.