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You get some surplus, because it is not possible to write a non-linear pricing scheme that extracts everything from all customers. That is basically, depending
by zwaps 9y ago
You get some surplus, because it is not possible to write a non-linear pricing scheme that extracts everything from all customers.
That is basically, depending on your willingness to pay, you may get a pretty good deal.
The underlying reason for this is that the producer basically has to pay you a bit of surplus to reveal your willingness to pay.
So, there is consumer surplus.
- perl4ever 9y agoMoney paid for information seems like it would be part of the transaction costs.
- zwaps 9y agoNot sure... transactions costs could be defined as costs that need to be payed by either side to complete the transaction. In this case, we are talking about a shift of surplus towards the consumer. If you have a high willingness to pay, it is beneficial for you to signal that your willingness to pay is actually low. If there was only one price, this would incentivize the firm to give you (and everyone else) a lower price. Instead, to get you to pay more, the contract proposed to you must be relatively more beneficial to you than just choosing a simpler service plan or a lower value good and bagging the surplus for later. This "relative benefit" is the information rent you will earn.