Nonlinear Pricing with Resale

We consider the problem of a monopolist-- choosing an optimal nonlinear pricing scheme-- facing two consumers who can resell some or all of the goods to each other in a secondary market. We suppose that the valuations of the consumers are drawn independently from a continuous distribution. We …find conditions for the optimum direct mechanism and show that the monopolist can be better off or worse off as compared to the without resale case, depending on the speci…fics of the cost function of the monopolist and the utility functions of the consumers.