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Two-part tariffs with partial unbundling

Jensen, Sissel
Working paper
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URI
http://hdl.handle.net/11250/162926
Date
2001-10
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  • Discussion papers (SAM) [578]
Abstract
The paper explores second degree price discrimination in a multidimensional

good context. There are two types of consumers with demand

described by a two-dimensional vector, a quantity dimension and a service

attribute dimension (mode of usage, usage pattern). The adverse selection

parameter determines the consumers’ willingness to pay for quantity

increments with a certain set of attributes. The multi-dimensionality is

exploited by forcing a restriction on the mode of usage towards consumers

with low willingness to pay in order to make it less tempting for high types

to mimic a low type. We show that the firm introduces distortions in

the use of the service against a decrease in the quantity distortions in the low-type’s contract.
Publisher
Norwegian School of Economics and Business Administration. Department of Economics
Series
Discussion paper
2001:19

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