Mixing Goods with Two-Part Tariffs

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Mixing Goods with Two-Part Tariffs

Author Info

Steffen Hoernig () (New University of Lisbon - Faculdade de Economia)
Tommaso Valletti () (Imperial College London, University of Rome "Tor Vergata" and CEPR)

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Abstract

We consider a market where consumers mix content offered by different firms. We show how tariff structures have an impact on firms' profits and efficiency. As compared to pure linear pricing, when firms charge two-part tariffs they make higher profits, while consumers are worse off and the allocation is not first-best since too little mixing occurs. Flat subscription fees make mixing unattractive and are Pareto-dominated by all the other types of tariffs.

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Paper provided by Tor Vergata University, CEIS in its series CEIS Research Paper with number 72.

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Length: 24
Date of creation: 01 Aug 2006
Date of revision:
Handle: RePEc:rtv:ceisrp:72

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Article
- Hoernig, Steffen H. & Valletti, Tommaso M., 2007. "Mixing goods with two-part tariffs," European Economic Review, Elsevier, vol. 51(7), pages 1733-1750, October. [Downloadable!] (restricted)

Find related papers by JEL classification:
L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media

This paper has been announced in the following NEP Reports:

NEP-ALL-2006-11-25 (All new papers)
NEP-COM-2006-11-25 (Industrial Competition)
NEP-MIC-2006-11-25 (Microeconomics)
NEP-MKT-2006-11-25 (Marketing)

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

Armstrong, Mark, 2006. "Price discrimination," MPRA Paper 4693, University Library of Munich, Germany. [Downloadable!]
ANDERSON, Simon P. & GABSZEWICZ, Jean J., 2005. "The media and advertising : a tale of two-sided markets," CORE Discussion Papers 2005088, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE). [Downloadable!]
Other versions:
- Simon P., ANDERSON & Jean J., GABSZEWICZ, 2005. "The media and advertising : a table of two-sided markets," Discussion Papers (ECON - DÃ©partement des Sciences Economiques) 2005060, Université catholique de Louvain, Département des Sciences Economiques. [Downloadable!]
- Anderson, Simon P & Gabszewicz, Jean Jaskold, 2005. "The Media and Advertising: A Tale of Two-Sided Markets," CEPR Discussion Papers 5223, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
- Anderson, Simon P. & Gabszewicz, Jean J., 2006. "The Media and Advertising: A Tale of Two-Sided Markets," Handbook of the Economics of Art and Culture, Elsevier. [Downloadable!] (restricted)
d'Aspremont, C & Gabszewicz, Jean Jaskold & Thisse, J-F, 1979. "On Hotelling's "Stability in Competition"," Econometrica, Econometric Society, vol. 47(5), pages 1145-50, September. [Downloadable!] (restricted)
Anderson, S. P. & Neven, D. J., 1989. "Market efficiency with combinable products," European Economic Review, Elsevier, vol. 33(4), pages 707-719, April. [Downloadable!] (restricted)
Other versions:
- Anderson, S. & Neven, D.J., 1986. "Market efficiency with combinable products," CORE Discussion Papers 1986045, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
Matutes, Carmen & Regibeau, Pierre, 1992. "Compatibility and Bundling of Complementary Goods in a Duopoly," Journal of Industrial Economics, Blackwell Publishing, vol. 40(1), pages 37-54, March. [Downloadable!] (restricted)

Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

Nagler, Matthew, 2006. "Understanding the Internet's relevance to media ownership policy: a model of too many choices," MPRA Paper 2180, University Library of Munich, Germany. [Downloadable!]
Other versions:
- Matthew Nagler, 2007. "Understanding the Internet's Relevance to Media Ownership Policy: A Model of Too Many Choices," Topics in Economic Analysis & Policy, Berkeley Electronic Press, vol. 7(1), pages 1663-1663. [Downloadable!] (restricted)

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