Book contents
- Frontmatter
- Contents
- List of figures
- List of tables
- Acknowledgments
- I PRICING AND TELECOMMUNICATIONS
- II RECENT DEVELOPMENTS IN THE NORMATIVE ECONOMIC THEORY OF TARIFFS
- 3 Types of tariffs
- 4 Linear tariffs
- 5 Nonlinear tariffs
- 6 Cost-based tariffs
- III TELEPHONE RATE STRUCTURES IN THE UNITED STATES
- IV SYNTHESIS
- A US telephone price indexes
- Bibliography
- Index
- Selected list of RAND books
3 - Types of tariffs
Published online by Cambridge University Press: 28 October 2009
- Frontmatter
- Contents
- List of figures
- List of tables
- Acknowledgments
- I PRICING AND TELECOMMUNICATIONS
- II RECENT DEVELOPMENTS IN THE NORMATIVE ECONOMIC THEORY OF TARIFFS
- 3 Types of tariffs
- 4 Linear tariffs
- 5 Nonlinear tariffs
- 6 Cost-based tariffs
- III TELEPHONE RATE STRUCTURES IN THE UNITED STATES
- IV SYNTHESIS
- A US telephone price indexes
- Bibliography
- Index
- Selected list of RAND books
Summary
The context
The following four chapters review the economics literature on public utility pricing with special reference to the telephone sector. We concentrate on major contributions made in the last ten years. We do, however, selectively make reference to earlier research, in particular if it is judged to be important and at the same time not well-known or not well-understood.
Our main objective in these chapters is to assess the relevance of the theoretical literature for setting telephone tariffs that move toward social optimality. In particular, we are interested in the compatibility of tariff proposals with the particular technology and demand conditions that are found in the telephone industry.
We also critically evaluate the assumptions under which results in the literature are derived. To do this, we make implicit assumptions explicit, extend some results by lifting restrictive assumptions or by adding more realistic constraints, and extrapolate results from one type of tariff to another. In presenting the progress made in the normative literature we also modify and extend results derived for a particular objective, such as profit maximization, to other objectives, such as maximization of social surplus, when those objectives appear to be more relevant for the study.
The last two decades have witnessed unprecedented progress in research on design and in implementation of public utility tariffs. Starting with Baumol and Bradford's (1970) paper on optimal departures from marginal-cost pricing and the initiation of the Bell Journal of Economics and Management Science (now the RAND Journal of Economics), a large number of scientific papers have dealt with this subject.
- Type
- Chapter
- Information
- Telecommunications PricingTheory and Practice, pp. 23 - 37Publisher: Cambridge University PressPrint publication year: 1991