Evaluating Welfare with Nonlinear Prices

Peter C. Reiss and Matthew W. White

No 12370, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper examines how to evaluate consumer welfare when consumers face nonlinear prices. This problem arises in many settings, such as devising optimal pricing strategies for firms, assessing how price discrimination affects consumers, and evaluating the efficiency costs of many transfer programs in the public sector. We extend prior methods to accommodate a broad range of modern pricing practices, including menus of pricing plans. This analysis yields a simpler and more general technique for evaluating exact consumer surplus changes in settings where consumers face nonlinear prices. We illustrate our method using recent changes in mobile phone service plans.

JEL-codes: D12 D40 H20 L10 (search for similar items in EconPapers)
Date: 2006-07
New Economics Papers: this item is included in nep-com, nep-mic, nep-mkt and nep-pbe
Note: IO
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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