A Disneyland Dilemma: Two-Part Tariffs for a Mickey Mouse Monopoly

Oi, Walter Y.

doi:10.2307/1881841

Cited by 508 publications

(245 citation statements)

References 1 publication

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“…7 These taxes exceed the marginal external costs (again equal to 4.93 on each link), which is reminiscent of Oi's (1971) result that with heterogeneous consumers, a two-part pricing monopolist can generally increase profits by setting the price per usage above marginal cost. In contrast, optimal capacities are smaller than under base parameters, 89 percent of initial capacities for links 1 and 2 and 40 percent for link 3, which is not only consistent with the lower use levels following the higher use taxes, but also reflects that capacity costs, too, are weighed with f and hence have become higher.…”

Section: Absence Of Congestion On Some Roadsmentioning

confidence: 98%

Pricing, Capacity Choice and Financing in Transportation Networks

Verhoef

Rouwendal

2003

SSRN Journal

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ABSTRACT. This paper explores interrelations between pricing, capacity choice, and financing in transportation networks. We build on the Mohring-Harwitz result on self-financing of optimally designed and priced roads and investigate it in a network environment under various types of second-best regulation. A small network model with endogenous car ownership demonstrates that optimal congestion pricing and capacity choice over an entire network may cause user prices to increase more in initially mildly congested areas compared to heavily congested areas. Furthermore, a flat kilometer charge under optimal capacity choice may result in first-best efficiency gains.

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Section: Absence Of Congestion On Some Roadsmentioning

confidence: 98%

Pricing, Capacity Choice and Financing in Transportation Networks

Verhoef

Rouwendal

2003

SSRN Journal

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“…Following the terminology of Oi (1971) quoted in the introduction of this paper, side transactions between consumers are sometimes referred to as "resale" of the firm's product. Social welfare is measured without regard for its distribution among the consumers and the monopolist, that is, welfare is simply the unweighted sum of consumer surplus and firm profit.…”

Section: Part (Ii) Of Ao Implies That the Demand Curves Do Not Cross mentioning

confidence: 99%

Two-Part Pricing with Costly Arbitrage

McManus¹

2001

Southern Economic Journal

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This paper considers the optimal two-part pricing strategy of a monopolist whose customers collude when they purchase the firm's product. In contrast to the sentiment in the existing price discrimination literature, I find that a monopolist's profit can actually increase when consumers share its good. When transaction costs for collusion are zero the firm can extract the full consumer surplus through two-part prices. When transaction costs are positive or there are a substantial number of consumers without access to resale, the firm may be hurt by arbitrage.

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“…The bulk of the theoretical results are confined to the unrealistic case of identical users, in which case two-part tariffs can support the social optimum. Intuitively, a monopolist who charges an access fee and a usage fee, since he can extract all the user surplus with the access fee, has the incentive to maximize that surplus by charging a usage fee equal to the optimal congestion toll [Oi, 1971]. Further, even if there are several (identical) network providers (and identical consumers), they will choose a usage fee equal to the optimal congestion toll [Scotchmer, 1985b].…”

Section: Private Market Outcomesmentioning

confidence: 99%

The Internet: A Future Tragedy of the Commons?

Gupta¹,

Stahl²,

Whinston³

1997

Advances in Computational Economics

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In the future data communication networks interoperability becomes critical from both technological and business strategy perspective. Significance of interoperability has to be evaluated in terms of the overall economic performance of the system. In this paper we will present our view of the future of data communication networks, challenges in interoperability, and the economic challenges that will arise in this "real time" economy. We will provide insights derived from general equilibrium approach to these networks, e.g., what are the impacts of competition and interoperability on the competing entities which will own different parts of the network. We believe that potential excessive congestion is the single biggest obstacle in the feasibility of a global, interoperable network. We will discuss the simulation experiments we have carried out to determine approximate priority prices in real-time and discuss the potential benefits in managing congestion through such a pricing scheme. We define a framework for the policy research for an interoperable network which may facilitate electronic commerce. We also discuss the issues related to the market structure such as monopoly, duopoly, and more competitive ownership of the parts of the network and its impact on interoperability, efficiency, and economic performance of the system.

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A Disneyland Dilemma: Two-Part Tariffs for a Mickey Mouse Monopoly

Cited by 508 publications

References 1 publication

Pricing, Capacity Choice and Financing in Transportation Networks

Pricing, Capacity Choice and Financing in Transportation Networks

Two-Part Pricing with Costly Arbitrage

The Internet: A Future Tragedy of the Commons?

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