Multidimensional mechanism design: Finite-dimensional approximations and efficient computation

Multidimensional mechanism design problems have proven difficult to solve by extending techniques from the one-dimensional case. This paper considers mechanism design problems with multidimensional types when the seller's cost function is not separable across buyers. By adapting results obtained by Border (1991), we transform the seller's problem into a representation that only involves “interim” variables and eliminates the dimensionality dependence on the number of buyers. We show that the associated infinite-dimensional optimization problem posed by the theoretical model can be approximated arbitrarily well by a sequence of finite-dimensional linear programming problems.