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.

Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005

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References in periodicals archive ?

In Australia, residential electricity prices are structured as conventional two-part tariffs comprising a fixed charge and a 'flat-rate' variable energy charge.

On the Inequity of Flat-rate Electricity Tariffs

To assess the robustness of the main results to the assumption on the contractual form, the model is solved using two-part tariffs. Twopart tariff contracts are not affected by double marginalization (implying that they are more efficient than royalty rates).

Licensing policy and technology adoption in standard setting organizations

Davis, "The Equity and Efficiency of Two-Part Tariffs in U.S.

Pricing energy efficiently

In addition to constructing a framework for evaluations of the emerging carbon offset market, the article makes two contributions to the theoretical literature on efficient pricing with two-part tariffs. First, we derive specific pricing formulas for a market intermediary that simultaneously has monopsony power with respect to upstream purchases and monopoly power with respect to downstream sales.

Optimal two-part pricing in a carbon offset market: a comparison of organizational types

carriers would use a menu of two-part tariffs, not three-part tariffs.

Mobile misperceptions

General theory is covered in sections on marginal cost pricing, Ramsey pricing, peak load pricing, pricing under uncertainty, two-part tariffs and nonlinear pricing, and game theoretic approaches.

The economics of public utilities; 2v

When retailers compete there are two feasible and legally permissible methods of achieving channel coordination: an explicit quantity-discount schedule or a menu of two-part tariffs. (The latter is derived in detail in this paper.) A feasible and legally permissible alternative to channel coordination is for the manufacturer to utilize a sophisticated Stackelberg two-part tariff--itself a form of a quantity-discount schedule.

Is Channel Coordination All It Is Cracked Up To Be?

Willig(1978) showed that offering optional two-part tariffs can cause a Pareto improvement, as long as all customers are final consumers and the existing tariff is retained as an option.

Competition in the water industry

To reach optimality requires two-part tariffs or other complicated nonlinear pricing schemes.

Commentary

Also, when the regulated firm moves from linear price to uniform two-part tariffs, the smaller users lose more of their consumer surplus than the larger users.

A note on nonlinear prices under rate-of-return regulation

"Welfare Effects of Discriminatory Two-Part Tariffs Constrained by Price Caps." Economics Letters 56(3): 293-298.

Power System Transformation toward Renewables: An Evaluation of Regulatory Approaches for Network Expansion

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