Nonlinear Pricing: Published in Association with the Electric Power Research Institute / Edition 1

Nonlinear Pricing: Published in Association with the Electric Power Research Institute / Edition 1

by Robert B. Wilson
     
 

ISBN-10: 0195115821

ISBN-13: 9780195115826

Pub. Date: 01/28/1997

Publisher: Oxford University Press, USA

What do phone rates, frequent flyer programs, and railroad tariffs all have in common? They are all examples of nonlinear pricing. Pricing is nonlinear when it is not strictly proportional to the quantity purchased. The Electric Power Research Institute has commissioned Robert Wilson to review the various facets of nonlinear pricing. The work starts with a general

Overview

What do phone rates, frequent flyer programs, and railroad tariffs all have in common? They are all examples of nonlinear pricing. Pricing is nonlinear when it is not strictly proportional to the quantity purchased. The Electric Power Research Institute has commissioned Robert Wilson to review the various facets of nonlinear pricing. The work starts with a general non-mathematical discussion, followed by a more technical presentation intended for readers with a fairly advanced background. Thorough and detailed, this study has ample examples of case studies from a variety of industries.

Product Details

ISBN-13:
9780195115826
Publisher:
Oxford University Press, USA
Publication date:
01/28/1997
Edition description:
REPRINT
Pages:
440
Product dimensions:
9.19(w) x 6.06(h) x 1.23(d)

Table of Contents

1. Introduction
3(24)
1.1 Motivations for Nonlinear Pricing
5(2)
1.2 Practical Uses for Nonlinear Pricing
7(3)
1.3 Feasibility of Nonlinear Pricing
10(5)
1.4 Illustration: The Electric Power Industry
15(2)
1.5 Overview of the Chapters
17(6)
1.6 Summary
23(4)
I: FUNDAMENTALS OF NONLINEAR PRICING 27(98)
2. Illustrations of Nonlinear Pricing
27(19)
2.1 Time and Newsweek's Advertising Rates
28(2)
2.2 EDF's Tariffs for Electric Power
30(6)
2.3 PG&E's Curtailable Service
36(3)
2.4 MCI's and AT&T's Telephone Tariffs
39(2)
2.5 Federal Express' Mail Rates
41(1)
2.6 Delta Airlines' Frequent Flyer Rebates
41(3)
2.7 Summary
44(2)
3. Models and Data Sources
46(27)
3.1 Descriptions of Demand Behavior
49(8)
3.2 Estimation of the Demand Profile
57(5)
3.3 Welfare Considerations
62(4)
3.4 Cautions and Caveats
66(1)
3.5 Standard Assumptions(*)
67(4)
3.6 Summary
71(2)
4. Tariff Design
73(25)
4.1 The Price Schedule of a Monopolist
73(8)
4.2 Extensions and Qualifications
81(7)
4.3 The Bundling Interpretation
88(1)
4.4 Fixed Costs and Fixed Fees
89(2)
4.5 Multipart Tariffs
91(5)
4.6 Summary
96(2)
5. Ramsey Pricing
98(27)
5.1 The Price Schedule of a Regulated Firm
99(9)
5.2 Pareto-Improving Tariffs
108(10)
5.3 Long-Distance Telephone Tariffs
118(3)
5.4 Summary
121(3)
II: DISAGGREGATED DEMAND MODELS 125(86)
6. Single-Parameter Disaggregated Models
125(39)
6.1 A Model with Discrete Types
126(6)
6.2 Models with One-Dimensional Types
132(4)
6.3 Two-Part Tariffs
136(5)
6.4 Multipart Tariffs
141(9)
6.5 Nonlinear Tariffs
150(3)
6.6 Some Examples
153(5)
6.7 Fixed Costs and Fixed Fees
158(5)
6.8 Summary
163(1)
7. Income Effects
164(13)
7.1 Construction of the Demand Profile
164(1)
7.2 Characterization of the Optimal Tariff
165(1)
7.3 Examples
166(7)
7.4 Fixed Fees
173(2)
7.5 Summary
175(2)
8. Technical Amendments
177(34)
8.1 Technical Considerations
177(8)
8.2 Derivations of the Optimal Tariff
185(5)
8.3 Approximate Optimality of Multipart Tariffs
190(4)
8.4 Multiple Dimensions of Customers' Types
194(6)
8.5 A General Demand-Profile Formulation
200(6)
8.6 Summary
206(5)
III: MULTIDIMENSIONAL TARIFFS 211(70)
9. Multidimensional Pricing
211(25)
9.1 A Multidimensional Formulation
212(7)
9.2 Design of Multidimensional Tariffs
219(4)
9.3 Examples
223(5)
9.4 An Item-Assignment Formulation
228(7)
9.5 Summary
235(1)
10. Priority Pricing
236(23)
10.1 Capacity-Constrained Tariffs: Priority Pricing
237(7)
10.2 Ramsey Pricing of Priority Service
244(9)
10.3 Nonlinear Pricing in a Priority Queuing System
253(4)
10.4 Summary
257(2)
11. Capacity Pricing
259(22)
11.1 Background
259(2)
11.2 Cost Recovery of Load-Duration Demands
261(5)
11.3 Pricing Load-Duration Demands
266(10)
11.4 Summary
276(5)
IV: MULTIPRODUCT TARIFFS 281(94)
12. Multiple Products and Competitive Tariffs
281(52)
12.1 Separable Multiproduct Tariffs
282(19)
12.2 Monopolistic Competition
301(2)
12.3 Oligopoly
303(6)
12.4 Nonlinear Supply Schedules
309(2)
12.5 Summary
311(2)
13. Multiproduct Pricing
313(37)
13.1 Special Features of Multiproduct Tariffs
314(3)
13.2 Formulation
317(8)
13.3 A Reprise of Priority Service
325(2)
13.4 Single Type Parameters
327(5)
13.5 Multiple Type Parameters
332(12)
13.6 Construction of Multiproduct Prices
344(4)
13.7 Summary
348(2)
14. Multiproduct Tariffs
350(25)
14.1 Formulation
351(3)
14.2 The Optimal Multiproduct Tariff
354(5)
14.3 Numerical Examples
359(4)
14.4 Illustration: Load-Factor Tariffs
363(5)
14.5 An Alternative Formulation*
368(3)
14.6 Summary
371(4)
SUPPLEMENT 375(36)
15. Other Applications of Nonlinear Pricing
375(26)
15.1 Product Pricing Applications
375(7)
15.2 Incentives in Markets with Private Information
382(8)
15.3 Incentives in Labor Contracting
390(5)
15.4 Taxation and Regulatory Policies
395(3)
15.5 Summary
398(3)
16. Bibliography
401(10)
16.1 A Short History
401(5)
16.2 Chapter References
406(5)
References 411(12)
Index 423

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