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Western Cell offers wireless phone service. Market research has established that there are two types of customers, in equal number: light users (Type 1) and
Western Cell offers wireless phone service. Market research has established that there are two types of customers, in equal number: light users (Type 1) and heavy users (Type 2). The demand curves are q1 = 100 - p and q2 = 120 - p. Assume that the marginal cost of placing calls is zero. Suppose that although the seller cannot price discriminate, it can use a single 'two-part tariff'. That is, a two-part tariff (T, p) should be available to all types of consumers. Identify the profit maximizing (T, p).
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