Two-part tariffs

Nikolaos Vettas ()

from Palgrave Macmillan

Abstract: A two-part tariff is a pricing scheme according to which the buyer pays to the seller a fixed fee and a constant charge for each unit purchased. When it is used, the average price paid decreases as more units are purchased. Further, it is the marginal charge and not the fixed fee that determines how many units will be purchased. Therefore, a two-part tariff can be used as a vehicle for price discrimination and also for manipulating the incentives given to the buyers, allowing also the sellers to capture part of the residual surplus through an appropriately chosen fixed fee.

Keywords: Nonlinear pricing; Contracts; Price discrimination; Vertical trade (search for similar items in EconPapers)
JEL-codes: D86 L12 L13 L14 (search for similar items in EconPapers)
Date: 2011
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.dictionaryofeconomics.com/article?id=pde2011_T000188 (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:pal:dofeco:v:5:year:2011:doi:3860

Ordering information: This item can be ordered from
http://www.dictionar ... lp/faq#_Toc198623697

Access Statistics for this chapter

More chapters in The New Palgrave Dictionary of Economics from Palgrave Macmillan
Bibliographic data for series maintained by Sheeja Sanoj ( this e-mail address is bad, please contact ).