Two-Part Marginal Cost Pricing Equilibria With n Firms: Sufficient Conditions for Existence and OptimalityInternational Economic Review (1993)
We explore the interactions among firms with increasing returns regulated to break even by pricing with two-part tariffs. We provide conditions for existence and for efficiency of general equilibria with n-firms. This involves finding hookup fees that are voluntarily paid and cover the firms' losses from marginal cost pricing-a problem that because of both substitution and income effects is complicated by multiple firms using two-part tariffs, but that must be solved to ensure the continuity of demands necessary to prove break-even equilibria exist.
Publication DateNovember, 1993
Citation InformationAaron S. Edlin and Mario Epelbaum. "Two-Part Marginal Cost Pricing Equilibria With n Firms: Sufficient Conditions for Existence and Optimality" International Economic Review Vol. 34 Iss. 4 (1993)
Available at: http://works.bepress.com/aaron_edlin/2/