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A Graphical Exposition of the Profit Maximizing Two-Part Tariff

Author

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  • Frederick Chen

Abstract

This note presents a simple graphical approach for deriving the profit maximizing two-part tariff when there are two types of consumers in the market. The exposition covers both the case in which a monopoly can offer only one two-part tariff plan and the case in which the monopoly can offer two different plans. JEL Classification : D4

Suggested Citation

  • Frederick Chen, 2022. "A Graphical Exposition of the Profit Maximizing Two-Part Tariff," The American Economist, Sage Publications, vol. 67(1), pages 116-122, March.
    • Handle: RePEc:sae:amerec:v:67:y:2022:i:1:p:116-122
    DOI: 10.1177/05694345211019721
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    Keywords

    two-part tariff; price discrimination;

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design

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