Cover: Incremental Costs and Efficient Prices with Lumpy Capacity

Incremental Costs and Efficient Prices with Lumpy Capacity

The Two Product Case

Published 1994

by Rolla Edward Park

Purchase Print Copy

 Format Price
Add to Cart Paperback37 pages $13.00

Applies the theory of optimal pricing to local telephone service. The two products are patterned after two important products supplied by local exchange companies: access to telephone service (monthly subscriptions) and use of telephone service (local calls). Finds that (1) welfare-maximizing (optimal) constant prices offer only limited welfare gains over average incremental cost prices and (2) optimal variable prices offer proportionately much larger gains over Boiteux prices than do optimal constant prices.

Research conducted by

This report is part of the RAND monograph report series. The monograph/report was a product of RAND from 1993 to 2003. RAND monograph/reports presented major research findings that addressed the challenges facing the public and private sectors. They included executive summaries, technical documentation, and synthesis pieces.

This document and trademark(s) contained herein are protected by law. This representation of RAND intellectual property is provided for noncommercial use only. Unauthorized posting of this publication online is prohibited; linking directly to this product page is encouraged. Permission is required from RAND to reproduce, or reuse in another form, any of its research documents for commercial purposes. For information on reprint and reuse permissions, please visit www.rand.org/pubs/permissions.

RAND is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.