Two Part Tariff
The two-part tariff is another form of price discrimination where the producer charges an initial fee then a secondary fee for the use of the product. An example of this is razors, you pay an initial cost for the razor and then pay for the replacement blades. This pricing strategy works because it shifts the demand curve to the right: since you have already paid for the initial blade holder you will buy the blades which are now cheaper than buying a disposable razor.
Read more about this topic: Price Discrimination
Famous quotes containing the words part and/or tariff:
“An Englishman, methinks,—not to speak of other European nations,—habitually regards himself merely as a constituent part of the English nation; he is a member of the royal regiment of Englishmen, and is proud of his company, as he has reason to be proud of it. But an American—one who has made tolerable use of his opportunities—cares, comparatively, little about such things, and is advantageously nearer to the primitive and the ultimate condition of man in these respects.”
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