When two-part tariffs are not enough: Mixing with nonlinear pricing

Tommaso Valletti and Steffen Hoernig

No 7720, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We consider competition in nonlinear tariffs when consumers mix two goods, and ask whether simple two-part tariffs or exclusivity can arise in equilibrium. Contrary to the existing literature, this happens only when consumer types are observable. If they are unobservable, then the equilibrium tariff has decreasing marginal prices even when goods are almost homogeneous, and a third of consumers always mixes goods. Two-part tariffs will never even arise as best responses to arbitrary tariffs.

Keywords: Exclusivity; Mixing goods; Nonlinear tariffs; Two-part tariffs (search for similar items in EconPapers)
JEL-codes: L13 L82 (search for similar items in EconPapers)
Date: 2010-02
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Citations: View citations in EconPapers (1)

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Journal Article: When Two-Part Tariffs are Not Enough: Mixing with Nonlinear Pricing (2011)
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