A new contribution to the ‘Paris Metro Pricing’ proposal

Abstract

Using the concept of the ‘Paris Metro Pricing’, we will show that, when the distribution of the capacity between sub-networks leads to any loss of technical effectiveness and when a traditional condition on the ‘hazard rate’ is checked, it is always optimal for the monopolist to subdivide his main network in as many sub-networks as there are different types of net surfers.

Notes

¹ See for instance Jacko et al . (2000).

² Full information is available at the URL: http://www.sims.berkeley.edu/resources/infoecon/