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Doing More with Less: Price Discrimination with Three-Part vs. Two-Part Tariffs
2008
Social Science Research Network
We show that a relatively small menu of three-part tariffs (3PTs) can be more profitable and, sometimes, socially more desirable than a larger menu (more items) of two-part tariffs (2PTs). Often, a single three-part tariff can beat a sorting menu comprising multiple two-part tariffs. Moreover, this 3PT menu can be designed with less information about consumer preferences, relative to the menu of two-part tariffs which, in order to segment customers optimally, needs fine-grained information
doi:10.2139/ssrn.1134387
fatcat:q6tgumoxnbfoxe5c7vcyu4ebnu