Two-part tariffs set by a risk-averse monopolist

Xiangkang Yin

Journal of Economics, 2013, vol. 109, issue 2, 175-192

Abstract: This paper revisits the classical issues of two-part tariffs by considering risk aversion of a monopolistic seller. Under demand uncertainty, equilibrium unit price declines and approaches towards marginal cost as the seller becomes more risk averse. Marginal-cost pricing prevails, irrespective of the seller’s risk attitude, if clients are homogenous. Under cost uncertainty, unit price is higher than marginal cost and monotonically increases in risk aversion. The model is then extended to accommodate buyers’ risk aversion and it is found that demand uncertainty makes unit price decline in the seller’s risk aversion again but increase in buyers’ risk aversion. Copyright Springer-Verlag 2013

Keywords: Monopoly; Two-part tariff; Risk aversion; Marginal-cost pricing; D21; D42; L11; L12 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1007/s00712-012-0288-2 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:jeczfn:v:109:y:2013:i:2:p:175-192

DOI: 10.1007/s00712-012-0288-2

Access Statistics for this article

Journal of Economics is currently edited by Giacomo Corneo

More articles in Journal of Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().