Two-Part Tariffs and Monopoly Profits When Visits Are Variable

Owen R. Phillips and Raymond Battalio

Bell Journal of Economics, 1983, vol. 14, issue 2, 601-604

Abstract: A two-part tariff exists when a fixed payment is made before any purchases are allowed. When buyers visit a monopolist more than once per period, they have the ability to substitute between visits and consumption per visit. This substitution weakens the surplus-extracting power of a two-part tariff; and in some cases it is more profitable to abandon the entry fee altogether.

Date: 1983
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