What do you understand by the two-part tariff in Economics?

Two-part tariff in economics stands for an unconventional pricing technique where a fee is first charged by a business from consumers for its product and then also levies a per unit usage fee. It is generally seen as a system for price discrimination which is used by profit-seeking businesses which try to maximize their total revenue to completely capture any available consumer surplus. E.g. is a club charges its members a membership fee which is standard but at the same time also charges for other basic entry privileges on individual services which are offered by it.

Published: June 5, 2019 | Modified:June 5, 2019

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