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Two-part Tariff (two-part + tariff)

Distribution by Scientific Domains
Business, Economics, Finance and Accounting100%

Selected Abstracts

Regulation of an Open Access Essential Facility

ECONOMICA, Issue 300 2008
AXEL GAUTIER
A vertically integrated firm owns an essential input and operates on the downstream market. There is a potential entrant in the downstream market. Both firms use the same essential input. The regulator's objectives are (i) to ensure financing of the essential input and (ii) to generate competition in the downstream market. The regulatory mechanism grants non-discriminatory access of the essential facility to the entrant provided it pays a two-part tariff to the incumbent. The optimal mechanism generates inefficient entry. The inefficient entry captures the trade-off between market efficiency and infrastructure financing resulting from incomplete information and non-discriminatory access. [source]

SALES TECHNOLOGY AND PRICE LEADERSHIP,

THE MANCHESTER SCHOOL, Issue 2 2008
DEBABRATA DATTA
Two firms sell a homogeneous product to two buyers who differ significantly in their valuation of the good and are allowed to charge (possibly) multiple two-part tariffs. Firms decide upon optimal prices and the choice of sales technologies which help acquire revenues from nonlinear prices. There is a subgame-perfect equilibrium where firms choose different sales technologies and the firm with an advanced sales technology emerges to be a price leader, charging a two-part tariff and selling only to the low-valuation buyers. Consequently, the firm with the less advanced sales technology follows, charges only a fixed fee and serves the high-valuation buyers and always earns strictly higher profits than its leader. Social surplus may deteriorate with competition. [source]

WHOLESALE PRICING WHEN BUYERS ARE ASYMMETRIC COURNOT COMPETITORS,

THE MANCHESTER SCHOOL, Issue 2 2006
GIUSEPPE COLANGELO
This paper focuses on the pricing policy of a well-informed profit- maximizing producer selling to asymmetric retailers who compete ā la Cournot. An optimal upstream two-part tariff implies the exit of the inefficient retailer, thus causing downstream monopolization. When this would bring about a significant increase in the efficient retailer's bargaining power, as is plausible, the producer will try to avoid this and consequently choose a pricing scheme that does not cause downstream monopolization. When this is the case, two alternatives emerge: a two-part tariff (ensuring no downstream monopolization) or third-degree price discrimination. The more asymmetric in cost retailers are (consistent with no downstream monopolization), the more likely it is to see third-degree price discrimination as the equilibrium wholesale pricing. When third-degree price discrimination is implemented, a welfare loss is easily produced. [source]

SALES TECHNOLOGY AND PRICE LEADERSHIP,

THE MANCHESTER SCHOOL, Issue 2 2008
DEBABRATA DATTA
Two firms sell a homogeneous product to two buyers who differ significantly in their valuation of the good and are allowed to charge (possibly) multiple two-part tariffs. Firms decide upon optimal prices and the choice of sales technologies which help acquire revenues from nonlinear prices. There is a subgame-perfect equilibrium where firms choose different sales technologies and the firm with an advanced sales technology emerges to be a price leader, charging a two-part tariff and selling only to the low-valuation buyers. Consequently, the firm with the less advanced sales technology follows, charges only a fixed fee and serves the high-valuation buyers and always earns strictly higher profits than its leader. Social surplus may deteriorate with competition. [source]

A Simple Characterization of the Second-best Two-part and Block-rate Tariffs Theory and Applications

ANNALS OF PUBLIC AND COOPERATIVE ECONOMICS, Issue 2 2003
by Jörg Borrmann
The general necessary optimality conditions for second-best discrete multipart tariffs are rather complex. In this paper, we derive a simplified characterization of these conditions for two-part tariffs and for block-rate tariffs for given thresholds of these tariffs. The simplified necessary optimality conditions are equivalent to the necessary conditions for a Ramsey-optimum for goods with continuously variable individually demanded quantities. We demonstrate that this characterization of second-best multipart tariffs can be helpful, when applying the usual regulatory mechanisms to these tariffs. In particular, we consider Vogelsang,Finsinger (1979) regulation as well as a particular form of price-cap regulation which is related to the Laspeyres index of prices. [source]

COMPETITION CAN HARM CONSUMERS,

AUSTRALIAN ECONOMIC PAPERS, Issue 3 2008
SIMON COWAN
Duopolists selling differentiated products can generate less consumer surplus than a monopoly selling one of the products. In a Hotelling-type model where a monopoly supplies more than half of potential consumers, but not all, entry by a rival leads to a duopoly price that is higher than the monopoly price. Consumers in aggregate will be made worse off by such entry when the effect of the price increase outweighs the benefit of extra variety. When consumers have continuous demand functions and firms use two-part tariffs, duopoly can also result in lower aggregate consumer surplus than monopoly. [source]