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Consider a market with two types of potential users: those in proportion have inverse demand curves = 5 /2. The remainder have inverse demand curves
Consider a market with two types of potential users: those in proportion have inverse demand curves = 5 /2. The remainder have inverse demand curves = 10 . Normalize the total number of consumers to be 1 and let = 2 be the marginal cost. 1.a)What is the optimal (profit-maximizing) two-part tariff (as a function of ) that induces both types of consumers to buy? 1.b) What is the optimal Two-part tariff when only high-demand consumers buy the good? 1.c) If = 1/2, which pricing scheme gives larger profits? What if = 3/4?
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