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Two-part tariff, demand uncertainty and double marginalization: An experiment

Author

Listed:
  • Olivier Bonroy

    (GAEL - Laboratoire d'Economie Appliquée de Grenoble - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - UGA - Université Grenoble Alpes - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - UGA - Université Grenoble Alpes)

  • Alexis Garapin

    (GAEL - Laboratoire d'Economie Appliquée de Grenoble - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - UGA - Université Grenoble Alpes - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - UGA - Université Grenoble Alpes)

  • Nicolas Pasquier

    (GAEL - Laboratoire d'Economie Appliquée de Grenoble - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - UGA - Université Grenoble Alpes - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - UGA - Université Grenoble Alpes)

Abstract

In an uncertain demand environment, the per-unit price of a two-part tariff can have insurance properties, insofar as it transfers risk from risk-averse downstream firms to less risk averse upstream firms, and compensation properties insofar as it compensates downstream firms for lessened attractiveness of trade. Both properties have opposite effects such as the first one can increase double marginalization and the second one can mitigate it. This paper provides experimental evidence of both properties.

Suggested Citation

  • Olivier Bonroy & Alexis Garapin & Nicolas Pasquier, 2025. "Two-part tariff, demand uncertainty and double marginalization: An experiment," Post-Print hal-04894528, HAL.
    • Handle: RePEc:hal:journl:hal-04894528
    DOI: 10.1016/j.econlet.2025.112171
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    References listed on IDEAS

    as
    1. Eguia, Jon X. & Llorente-Saguer, Aniol & Morton, Rebecca & Nicolò, Antonio, 2018. "Equilibrium selection in sequential games with imperfect information," Games and Economic Behavior, Elsevier, vol. 109(C), pages 465-483.
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    JEL classification:

    • C9 - Mathematical and Quantitative Methods - - Design of Experiments
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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