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Buffet Pricing

Author

Listed:
  • Nahata, Babu
  • Ostaszewski, Krzysztof
  • Sahoo, Prasanna

Abstract

This article analyzes a commonly used pricing practice, which the author calls 'buffet pricing,' in which for a fixed entry fee consumers can consume an unlimited quantity during a specified period of time. When consumers are homogeneous in preferences, this form of pricing can be more profitable than a two-part tariff if the total cost under a two-part tariff is greater than the 'net' total cost under buffet pricing. For heterogeneous consumers, depending on the distribution of consumer types and the relative magnitudes of transaction and production costs, buffet pricing can also be more profitable than two-part tariffs. Copyright 1999 by University of Chicago Press.

Suggested Citation

  • Nahata, Babu & Ostaszewski, Krzysztof & Sahoo, Prasanna, 1999. "Buffet Pricing," The Journal of Business, University of Chicago Press, vol. 72(2), pages 215-228, April.
    • Handle: RePEc:ucp:jnlbus:v:72:y:1999:i:2:p:215-28
    DOI: 10.1086/209611
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    Citations

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    Cited by:

    1. Ya-Hui Wang, 2014. "All You Can Eat: Behavioral Evidence From Taiwan," International Journal of Management and Marketing Research, The Institute for Business and Finance Research, vol. 7(2), pages 29-37.
    2. Wang, Judith Y.T. & Lindsey, Robin & Yang, Hai, 2011. "Nonlinear pricing on private roads with congestion and toll collection costs," Transportation Research Part B: Methodological, Elsevier, vol. 45(1), pages 9-40, January.
    3. Mason, Robin, 2000. "Simple competitive Internet pricing," European Economic Review, Elsevier, vol. 44(4-6), pages 1045-1056, May.
    4. Bonsall, Peter & Shires, Jeremy & Maule, John & Matthews, Bryan & Beale, Jo, 2007. "Responses to complex pricing signals: Theory, evidence and implications for road pricing," Transportation Research Part A: Policy and Practice, Elsevier, vol. 41(7), pages 672-683, August.
    5. Bai, Chong-En & Lu, Yi & Tao, Zhigang, 2009. "Excludable public goods: Pricing and social welfare maximization," Economics Letters, Elsevier, vol. 103(2), pages 72-74, May.
    6. Fernandez, Jose & Nahata, Babu, 2009. "Pay What You Like," MPRA Paper 16265, University Library of Munich, Germany.
    7. Chao, Yong & Fernandez, Jose & Nahata, Babu, 2019. "Pay-what-you-want pricing under competition: Breaking the Bertrand Trap," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 82(C).
    8. Daniel Flores, 2009. "All you can drink: should we worry about quality?," Journal of Regulatory Economics, Springer, vol. 35(1), pages 1-18, February.
    9. Kim, Jeong-Yoo & Lee, Nae-Chan & Kim, Dong-Ju, 2005. "Reexamining the effect of packet pricing in the wireless internet," Japan and the World Economy, Elsevier, vol. 17(4), pages 496-509, December.
    10. Lilo Locher, 2005. "Public Library Fees in Germany," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 29(4), pages 313-324, November.
    11. Wu, Dachrahn & Liu, Nien-Pen, 2007. "Why do amusement parks only charge a fixed admission fee?," Economics Letters, Elsevier, vol. 95(2), pages 180-185, May.
    12. Stan J. Liebowitz & Stephen E. Margolis, 2009. "Bundles Of Joy: The Ubiquity And Efficiency Of Bundles In New Technology Markets," Journal of Competition Law and Economics, Oxford University Press, vol. 5(1), pages 1-47.

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