We examine the impact of multiproduct nonlinear pricing on profit, consumer surplus and welfare in a duopoly. When consumers buy all their products from one firm (the one-stop shopping model), nonlinear pricing leads to higher profit and welfare, but often lower consumer surplus, than linear...

In this paper, we extend the standard Hotelling model of product differentiation to incorporate a second dimension of consumer heterogeneity that relates to the quantity of the product consumers wish to buy. This extension allows us to derive optimal nonlinear pricing rules chosen by competing...