search query: @author Hayes, B. / total: 3
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| Author: | Hayes, B. |
| Title: | Competition and two-part tariffs. |
| Journal: | Journal of Business
1987 : JAN, VOL. 60:1, p. 41-54 |
| Index terms: | PRICES TARIFFS COMPETITION MARKETING MODELS CONSUMER EXPECTATIONS |
| Language: | eng |
| Abstract: | Traditional theories have viewed two-part tariffs as price-discrimination devices,employed exclusively by firms with market power. An explanation is offered for the use of such price schedules by firms in highly competitive markets,such as health clubs. It is argued that in a world with buyer uncertainty about future demands,they can provide insurance for risk-averse buyers. The fixed entry fee finances a marginal price below marginal cost. It is shown that the benefits from this lower price will,under certain specified conditions,outweigh the costs of the entry fee. |
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