Optimal Nonuniform Prices

M. Barry Goldman, Hayne E. Leland, David Sumner Sibley

1984-04-01articleThe Review of Economic Studies157 citationsclosed

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Merger and Competition Analysis Consumer Market Behavior and Pricing Auction Theory and Applications

Abstract

We consider optimal nonuniform pricing schedules, where the price depends upon the amount purchased. Such schedules are regularly used by public utilities and other services. Welfare-optimal nonuniform prices are related to the theory of optimal uniform prices developed by Ramsey. We characterize situations in which upward or downward discontinuities in pricing schedules are optimal. Our results are applicable to a number of related problems, including optimal taxation, insurance, and incentives.

Citations in this library

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