two-part tariff


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Two-Part Tariff

A set fee assessed with a purchase along with a per-unit charge. For example, a credit card carries a two-part tariff if it has an annual fee and a minimum fee with each purchase. A two-part tariff is not necessarily an import tariff.

two-part tariff

see TARIFF.

two-part tariff

a pricing method that involves a charge per unit of GOOD or SERVICE consumed, plus a fixed annual or quarterly charge to cover overhead costs. Two-part tariffs can be used by PUBLIC UTILITIES or firms to achieve the benefits of MARGINAL-COST PRICING while raising sufficient revenues to cover all outlays (so avoiding a deficit and problems of financing it). Simple two-part tariffs are presently used to charge customers for gas, electricity telephones, etc., although more sophisticated multipart tariffs can be adopted to reflect the different marginal costs involved in offering products like electricity and transport services at peak and off-peak periods. See also AVERAGE-COST PRICING, NATIONALIZATION, PEAK-LOAD PRICING.
References in periodicals archive ?
For example, with a basic two-part tariff, the regulator requires the company to set per-unit charges equal to marginal cost, yielding the efficient level of consumption and eliminating the deadweight loss associated with the monopoly.
Federated Wireless's suggestions to the FCC incorporate well-known two-part tariff economic models to align financial incentives, protecting against the risk of spectrum warehousing.
Regarding its core activity - electricity transmission - FSK has a two-part tariff consisting of a grid maintenance rate (RUB/MW per month), which is charged per MW of connected capacity, and a rate for electricity loss compensation (RUB/MWh), which is charged per MWh of normative technological loss of electricity in the transmission grid.
Let's now consider systems based on market price, dual pricing and the two-part tariff
With the exception of Ordover and Panzar (1982), the firm setting the two-part tariff in the standard pricing models has either monopsony or monopoly power, and so there are just two elasticities within each pricing equation.
a two-part tariff with a fixed monthly fee of $10 and a constant,
The model also makes use of a two-part tariff consisting of a fixed rate for Best Effort (BE) service, and a usage-sensitive rate structure for premium QoS.
However, an upstream monopoly can impose a two-part tariff by choosing a franchise fee in such a way that all of the profit is extracted from the downstream firm.
We consider the class of all linear demand models with two types of consumers and a monopolist with constant marginal costs who charges a profit-maximizing uniform two-part tariff.
Below we show that this need not be the case: A two-part tariff is unable to achieve the outcome with channel integration even if only the manufacturer undertakes a noncontractible sales effort.
They find that a single two-part tariff achieves 63 percent of the potential welfare gains and 94 percent of the profits of a more complex, fully nonlinear tariff.
6) Another form of second-degree price discrimination is the two-part tariff.