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Buffet Pricing

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Author Info

  • 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.

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Bibliographic Info

Article provided by University of Chicago Press in its journal Journal of Business.

Volume (Year): 72 (1999)
Issue (Month): 2 (April)
Pages: 215-28

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Handle: RePEc:ucp:jnlbus:v:72:y:1999:i:2:p:215-28

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Web page: http://www.journals.uchicago.edu/JB/

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Cited by:
  1. 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.
  2. Daniel Flores, 2009. "All you can drink: should we worry about quality?," Journal of Regulatory Economics, Springer, vol. 35(1), pages 1-18, February.
  3. Lindsey, Robin & Wang, Judith & Yang, Hai, 2010. "Nonlinear Pricing on Private Roads with Congestion and Toll Collection Costs," Working Papers 2010-3, University of Alberta, Department of Economics.
  4. Mason, Robin, 2000. "Simple competitive Internet pricing," European Economic Review, Elsevier, vol. 44(4-6), pages 1045-1056, May.
  5. 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.
  6. Fernandez, Jose & Nahata, Babu, 2009. "Pay What You Like," MPRA Paper 16265, University Library of Munich, Germany.
  7. 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.
  8. 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.
  9. Lilo Locher, 2005. "Public Library Fees in Germany," Journal of Cultural Economics, Springer, vol. 29(4), pages 313-324, November.

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