IDEAS home Printed from
   My bibliography  Save this article

Two-Part Tariff and Aftermarket Duopoly: An Illustration


  • Joseph Felder
  • Robert Scott


The authors shed light on the original equipment manufacturer's strategic behavior in the duopoly aftermarket. The original equipment manufacturer, firm 1, captures via its foremarket price some fraction of the aftermarket consumer surplus, where that surplus is generated by consumption of its own and its competitor's aftermarket products. The other firm, firm 2, only operates in the aftermarket and does not capture any of the aftermarket consumer surplus. Assuming a Cournot or Stackelberg duopoly aftermarket with firm 1 as the quantity leader, we find the conditions under which firm 1's aftermarket price is above or below its marginal cost; the conditions under which firm 1's profit falls or increases when firm 2 adds value to its aftermarket product or lowers its marginal cost; and the conditions under which firm 1 is less profitable or more profitable in sharing the aftermarket than it would be alone.

Suggested Citation

  • Joseph Felder & Robert Scott, 2010. "Two-Part Tariff and Aftermarket Duopoly: An Illustration," The Journal of Economic Education, Taylor & Francis Journals, vol. 41(1), pages 41-53, January.
  • Handle: RePEc:taf:jeduce:v:41:y:2010:i:1:p:41-53 DOI: 10.1080/00220480903382222

    Download full text from publisher

    File URL:
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    1. Ernst Fehr & Simon Gächter, 2000. "Fairness and Retaliation: The Economics of Reciprocity," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 159-181, Summer.
    2. Manfred K÷nigstein, 2001. "Optimal Contracting With Boundedly Rational Agents," Homo Oeconomicus, Institute of SocioEconomics, vol. 18, pages 211-228.
    3. Vital Anderhub & Simon Gächter & Manfred Königstein, 2002. "Efficient Contracting and Fair Play in a Simple Principal-Agent Experiment," Experimental Economics, Springer;Economic Science Association, vol. 5(1), pages 5-27, June.
    4. Colin F. Camerer & Richard H. Thaler, 1995. "Anomalies: Ultimatums, Dictators and Manners," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 209-219, Spring.
    Full references (including those not matched with items on IDEAS)

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:jeduce:v:41:y:2010:i:1:p:41-53. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Chris Longhurst). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.