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:
“Man is the end of nature; nothing so easily organizes itself in every part of the universe as he; no moss, no lichen is so easily born; and he takes along with him and puts out from himself the whole apparatus of society and condition extempore, as an army encamps in a desert, and where all was just now blowing sand, creates a white city in an hour, a government, a market, a place for feasting, for conversation, and for love.”
—Ralph Waldo Emerson (1803–1882)
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