3 ms·
this is a form of two-part pricing[0], which is a compromise between simple (single) pricing and continuous pricing (aka perfect price discrimination) to maximi
by clairity 5y ago
this is a form of two-part pricing[0], which is a compromise between simple (single) pricing and continuous pricing (aka perfect price discrimination) to maximize value capture with minimal complexity.
two-part pricing also tends to make markets (from the demand-side) more rational and efficient, but that's not often the reason it's employed, which is why regulation is often needed (particularly in monopoly markets).
[0]: https://en.wikipedia.org/wiki/Two-part_tariff https://en.wikipedia.org/wiki/Two-part_tariff