Scandinavian Working Papers in Economics

Working Papers,
Lund University, Department of Economics

No 2005:19: Nonlinear Pricing and the Utility Possibility Set

Tommy Andersson ()
Additional contact information
Tommy Andersson: Department of Economics, Lund University, Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund, Sweden

Abstract: We consider nonlinear pricing policies that are designed by a social welfare maximizer who operates under a non-negative profit requirement. In our two-type economy, we characterize the set of all feasible nonlinear pricing policies and the frontier of the utility possibility set. Our results provide a link between distortion in consumption and individual, as well as, social welfare.

Keywords: Nonlinear Pricing; Budget-Balance; Welfare

JEL-codes: D42; D82

8 pages, March 4, 2005

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