Revisit Centralized Production of Complementary Goods

This article revisits a classic mechanism design problem for a principal who procures two complementary goods from a single agent. Although the final product requires both goods to function properly, the principal may purchase unbalanced quantities and discard some of the output. The wasteful spending on unbalanced quantities could help the principal reduce information rents. As such, the common approach of using the total cost of producing a final product as a sufficient statistics, which was used in several early articles, might be flawed