Asked by: Darinka Cazpersonal finance options
Why do firms use two part tariffs?
Last Updated: 16th April, 2020
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Besides, what is two part tariffs and how it is determined?
A two-part tariff is a pricing scheme where a producer charges a flat fee for the right to purchase units of a good or service and then charges an additional per-unit price for the good or service itself.
One may also ask, what is second degree price discrimination? Second-degree price discrimination occurs when a company charges a different price for different quantities consumed, such as quantity discounts on bulk purchases.
People also ask, why is franchising a two part tariff?
Another way to keep the retail price down is to use two-part tariffs; this allows the franchisor to charge a wholesale price just equal to his (marginal) cost, and to use the franchise fee to appropriate (all or part of) the profits.
What is intertemporal price discrimination?
Intertemporal price discrimination. The objective of inter-temporal price discrimination is to divide consumers into high-demand and low-demand groups by charging a price that is high at first but falls later.