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Figure 10.9 Two-Part Tariff
As a single-price monopoly, a mobile phone service will sell 3 GB of mobile service per month at a price of $20 per GB. Using a two-part tariff, however, the firm can increase its producer surplus from rectangle B to the triangle A + B + C. To do this, it will charge the per-unit price of $10 per GB, where D = MC, and set a fixed fee equal to the consumer’s surplus at this quantity, the area A + B + C. Under this pricing scheme, the firm will sell 6 GB of mobile service per month.