The efficiency results of marginal-cost pricing have been used to justify the imposition of regulatory policy tools to determine optimal pricing. In the more sophisticated form, Ramsey-Boiteux pricing methodology is recommended as a pricing-policy tool. These methods are static. Nevertheless,...

The so called flat-rate bias is a well documented phenomenon caused by consumers’ desire to be insured against fluctuations in their billing amounts. This paper shows that expectation-based loss aversion provides a formal explanation for this bias. We solve for the optimal two-part tariff when...

The so called flat-rate bias is a well documented phenomenon caused by consumers; desire to be insured against fluctuations in their billing amounts. This paper shows that expectation-based loss aversion provides a formal explanation for this bias. We solve for the optimal two-part tariff when...