Working Papers, Department of Economics, Lund University
Nonlinear Pricing under a Balanced-Budget Requirement: The Two-Type Case
Abstract: An economy consisting of two different types of consumers
and one publicly owned natural monopoly is under consideration. The
preferences of the consumers are assumed to be linear in money and the
demand curves are assumed not to cross. We also suppose that the net
utility from consumption is so high that we do not have to consider the
individual rationality constraints. Given these assumptions, we completely
characterize the set of budget-balanced and Pareto efficient nonlinear
pricing schedules. This complete characterization has not been presented in
the literature before.
Keywords: Nonlinear Pricing; Budget-Balance; (follow links to similar papers)
JEL-Codes: D63; D82; H40; (follow links to similar papers)
19 pages, October 8, 2004
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