Two-part tariff, demand uncertainty and double marginalization: An experiment

Olivier Bonroy, Alexis Garapin and Nicolas Pasquier

Economics Letters, 2025, vol. 247, issue C

Abstract: In an uncertain demand environment, the per-unit price of a two-part tariff can have insurance properties, insofar as it transfers risk from risk-averse downstream firms to less risk averse upstream firms, and compensation properties insofar as it compensates downstream firms for lessened attractiveness of trade. Both properties have opposite effects such as the first one can increase double marginalization and the second one can mitigate it. This paper provides experimental evidence of both properties.

Keywords: Two-part tariff; Vertical relationship; Demand uncertainty; Risk aversion; Double marginalization; Experiment (search for similar items in EconPapers)
JEL-codes: C9 D81 L14 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:247:y:2025:i:c:s0165176525000084

DOI: 10.1016/j.econlet.2025.112171

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