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Nonlinear Pricing and the Utility Possibility Set

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Abstract

We consider nonlinear pricing policies that are designed by a social welfare maximizer who operates under a non-negative profit requirement. In our two-type economy, we characterize the set of all feasible nonlinear pricing policies and the frontier of the utility possibility set. Our results provide a link between distortion in consumption and individual, as well as, social welfare.

Suggested Citation

  • Andersson, Tommy, 2005. "Nonlinear Pricing and the Utility Possibility Set," Working Papers 2005:19, Lund University, Department of Economics.
    • Handle: RePEc:hhs:lunewp:2005_019
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    File URL: http://project.nek.lu.se/publications/workpap/Papers/WP05_19.pdf
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    References listed on IDEAS

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    1. Helmuth Cremer & Firouz Gahvari, 2002. "Nonlinear Pricing, Redistribution, and Optimal Tax Policy," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 4(2), pages 139-161, April.
    2. Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August.
    3. Alfons J. Weichenrieder, 2004. "Second degree price discrimination and natural monopoly," Bulletin of Economic Research, Wiley Blackwell, vol. 56(2), pages 189-200, April.
    4. Sharkey, William W. & Sibley, David S., 1993. "Optimal non-linear pricing with regulatory preference over customer type," Journal of Public Economics, Elsevier, vol. 50(2), pages 197-229, February.
    5. repec:bla:jpbect:v:4:y:2002:i:2:p:139-61 is not listed on IDEAS
    6. Philippe Bernard & Jerome Wittwer, 2002. "Two-part Pricing, Public Discriminating Monopoly and Redistribution: A Note," Metroeconomica, Wiley Blackwell, vol. 53(2), pages 139-151, May.
    7. repec:dau:papers:123456789/1694 is not listed on IDEAS
    8. Eric Maskin & John Riley, 1984. "Monopoly with Incomplete Information," RAND Journal of Economics, The RAND Corporation, vol. 15(2), pages 171-196, Summer.
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    More about this item

    Keywords

    Nonlinear Pricing; Budget-Balance; Welfare;
    All these keywords.

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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