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Introducing Nonlinear Pricing into Consumer Choice Theory


  • Joseph S. Desalvo
  • Mobinul Huq


Introducing nonlinear pricing into the teaching of consumer choice theory would provide an extension that introduces the student to a ubiquitous phenomenon and would enable the instructor to develop some interesting behavioral results. After distinguishing linear and nonlinear pricing, the authors derive the tariff, the consumer budget equation, and some behavioral implications for various nonlinear pricing policies. They show, among other things, that under some forms of nonlinear pricing, after a price rise people may buy more of a commodity or more of a commodity than would have been bought under linear pricing. They note some complications arising in the treatment of quantity discounts and premia.

Suggested Citation

  • Joseph S. Desalvo & Mobinul Huq, 2002. "Introducing Nonlinear Pricing into Consumer Choice Theory," The Journal of Economic Education, Taylor & Francis Journals, vol. 33(2), pages 166-179, June.
  • Handle: RePEc:taf:jeduce:v:33:y:2002:i:2:p:166-179 DOI: 10.1080/00220480209596465

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    References listed on IDEAS

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    8. Michael K. Salemi & Carlie Eubanks, 1996. "Accounting for the Rise and Fall in the Number of Economics Majors with the Discouraged-Business-Major Hypothesis," The Journal of Economic Education, Taylor & Francis Journals, vol. 27(4), pages 350-361, October.
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    10. Richard Sabot & John Wakeman-Linn, 1991. "Grade Inflation and Course Choice," Journal of Economic Perspectives, American Economic Association, vol. 5(1), pages 159-170, Winter.
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    Cited by:

    1. repec:ksb:journl:v:4:y:2011:i:1:p:116-128 is not listed on IDEAS
    2. Jamal NazrulIslam & Haradhan Kumar Mohajan & Pahlaj Moolio, 2011. "Output Maximization Subject to a Nonlinear Constraint," KASBIT Business Journals, Khadim Ali Shah Bukhari Institute of Technology (KASBIT), vol. 4, pages 116-128, December.
    3. Fuliang Chen & Tao Xu, 2013. "A comparative study on Welfare results of nonlinear and linear pricing: based on asymmetric duopoly market," Chapters,in: The Chinese Anti-Monopoly Law, chapter 6, pages 218-232 Edward Elgar Publishing.

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