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A Note On The Economics Of Pass-Through With Two-Part Tariff Pricing

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  • Dov Rothman

Abstract

When a firm sells a product together with another product, it may rely on a two-part tariff. I explain that when a firm uses a two-part tariff, a cost increase may or may not be passed through to final consumers. Depending on the characteristics of final consumers’ demand, a cost increase could result in no increase in the price of either product, an increase in the price of both products, or an increase in the price of one product and a decrease in the price of the other product.

Suggested Citation

  • Dov Rothman, 2015. "A Note On The Economics Of Pass-Through With Two-Part Tariff Pricing," Journal of Competition Law and Economics, Oxford University Press, vol. 11(2), pages 401-408.
    • Handle: RePEc:oup:jcomle:v:11:y:2015:i:2:p:401-408.
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    File URL: http://hdl.handle.net/10.1093/joclec/nhv014
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    Cited by:

    1. Carey, Colleen, 2021. "Sharing the burden of subsidization: Evidence on pass-through from a subsidy revision in Medicare Part D," Journal of Public Economics, Elsevier, vol. 198(C).
    2. Soheil Ghili & Matthew Schmitt, 2018. "Risk Aversion and Double Marginalization," Cowles Foundation Discussion Papers 2144, Cowles Foundation for Research in Economics, Yale University.

    More about this item

    JEL classification:

    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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