Original scientific paper

TWO-PART TARIFFS AND MULTISTAGE PROGRAMMING

Ilko Vrankić ; Faculty of Economics Zagreb, University of Zagreb, Zagreb, Croatia
Zrinka Lukač orcid.org/0000-0003-2986-6345 ; aculty of Economics Zagreb, University of Zagreb, Zagreb, Croatia
Mira Oraić ; aculty of Economics Zagreb, University of Zagreb, Zagreb, Croatia

Abstract

This article demonstrates the relationship between the utility function's parameters which represent consumer's taste and the reservation price. We describe the changes in the reservation price analytically and
supplement the geometrical illustrations by economic interpretations. We formulate the monopolist’s problem of setting the price of a capital good and the price of a service that the capital good provides as the
two stage programming problem and illustrate the influence of consumers’ preferences and their income on the service market client structure and monopolist’s decisions on couple of illustrative examples.

Keywords

two-part tariff; reservation price; price of a capital good; service price; homogeneous and heterogeneous consumers; two-stage programming

Hrčak ID:

96666

URI

https://hrcak.srce.hr/96666

Publication date:

28.2.2011.

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