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A firm plans to set a two-part tariff for its product. That is, there will be an entry fee that consumers pay, and then a
A firm plans to set a two-part tariff for its product. That is, there will be an "entry fee" that consumers pay, and then a "price" charged to consumers for each unit consumed. A fitness club, for example, might have both an initial membership fee as well as a per unit price for each exercise class. Suppose the firm knows that it faces two sets of customers, one with relatively high and one with relatively low demand. Assuming that the two types are indistinguishable, and that both market segments are worth serving, it should
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