February 2016
Beginner to intermediate
500 pages
33h 40m
English
We now turn to another form of nonuniform pricing, two-part pricing. It is similar to nonlinear price discrimination in that the average price per unit paid by a consumer varies with the number of units purchased by that consumer.
With two-part pricing, the firm charges each consumer a lump-sum access fee for the right to buy as many units of the good as the consumer wants at a per-unit price.15 Thus, a consumer’s overall expenditure for amount q consists of two parts: an access fee, A and a per-unit price, p. Therefore, expenditure is [&E|=|A|+|pq.&]16 Because of the access fee, the average amount per unit that consumers pay is greater if they buy a small number of units than if they buy a larger number.