Microeconomics: Theory and Applications with Calculus, 4e

12.5 Two-Part Pricing

We now turn to another form of nonlinear pricing: two-part pricing. With two-part pricing, 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.9 Thus, the overall payment consists of two prices: an access fee and a per-unit price. 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.

⁹Jargon alert: The prices used in two-part pricing are often referred to as two-part tariffs.

Two-part pricing is commonly used. ...