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Multiproduct Tariffs

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Author Info

  • Wilson, Robert

Abstract

Necessary conditions characterizing optimal nonlinear multiproduct tariffs are derived from aggregate data about customers' responses to linear tariffs. These conditions are amenable to numerical solution with standard software by using a discrete formulation of an associated nonlinear optimization problem cast in terms of the marginal prices charged for incremental bundles. This approach avoids integrability restrictions that otherwise encumber the computations. However, this method does not ensure that customers' second-order conditions for optimality of their demands are satisfied. Some numerical examples are provided, and the extension of the method to Ramsey pricing is also demonstrated. Copyright 1991 by Kluwer Academic Publishers

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Bibliographic Info

Article provided by Springer in its journal Journal of Regulatory Economics.

Volume (Year): 3 (1991)
Issue (Month): 1 (March)
Pages: 5-26

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Handle: RePEc:kap:regeco:v:3:y:1991:i:1:p:5-26

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Web page: http://www.springerlink.com/link.asp?id=100298

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Cited by:
  1. Jehiel, Philippe & Moldovanu, Benny & Stacchetti, Ennio, 1999. "Multidimensional Mechanism Design for Auctions with Externalities," Journal of Economic Theory, Elsevier, vol. 85(2), pages 258-293, April.
  2. Guy Ho Wang, 2000. "On The Dynamic Incentive of Price-Quality Differentiation By A Monopolist Firm," International Economic Journal, Taylor & Francis Journals, vol. 14(1), pages 33-45.

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