Complex pricing and consumer-side transparency

Christian Fischer and Alexander Rasch

VfS Annual Conference 2018 (Freiburg, Breisgau): Digital Economy from Verein für Socialpolitik / German Economic Association

Abstract: We analyze a situation in which two horizontally differentiated firms compete in two-part tariffs (i.e., a linear and fixed price), and some consumers are not informed about the linear per-unit price. We show that there is a non-monotone relationship between the degree of consumer-side transparency and firm profits. Moreover, different from a situation without uninformed consumers, firms may make higher profits under two-part tariffs than under fixed fees only. There is also a non-monotone relationship between transparency and consumer surplus. Our model can explain why firms are against the abolishment of roaming fees and why the European Commission (EC) promotes it.

Keywords: fixed fee; linear price; roaming; transparency; two-part tariff (search for similar items in EconPapers)
JEL-codes: D43 L13 L42 (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-bec, nep-com, nep-gth, nep-mic and nep-reg
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc18:181642

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