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Two-Part Tariffs and Monopoly Profits When Visits Are Variable

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  • Owen R. Phillips
  • Raymond C. Battalio

Abstract

A two-part tariff exists when a fixed payment is made before any purchases are allowed. When buyers visit a monopolist more than once per period, they have the ability to substitute between visits and consumption per visit. This substitution weakens the surplus-extracting power of a two-part tariff; and in some cases it is more profitable to abandon the entry fee altogether.

Suggested Citation

  • Owen R. Phillips & Raymond C. Battalio, 1983. "Two-Part Tariffs and Monopoly Profits When Visits Are Variable," Bell Journal of Economics, The RAND Corporation, vol. 14(2), pages 601-604, Autumn.
    • Handle: RePEc:rje:bellje:v:14:y:1983:i:autumn:p:601-604
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    Cited by:

    1. Ricard Gil & Evsen Korkmaz & Ozge Sahin, 2020. "Can free-shipping hurt online retailers?," Quantitative Marketing and Economics (QME), Springer, vol. 18(3), pages 305-342, September.
    2. Ricard Gil & Evsen Korkmaz & Ozge Sahin, 0. "Can free-shipping hurt online retailers?," Quantitative Marketing and Economics (QME), Springer, vol. 0, pages 1-38.
    3. Ricard Gil & Evsen Korkmaz & Ozge Sahin, 2014. "Optimal Pricing of Access and Secondary Goods with Repeat Purchases: Evidence from Online Grocery Shopping and Delivery Fees," Working Papers 14-10, NET Institute.

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