On Nonlinear Pricing
2020
Nonlinear prices are commonly observed in market
economies. This paper investigates nonlinear pricing under general conditions.
It explores how nonlinear pricing can arise under nonconvexity. The arguments
are presented in the context of an optimization problem, where a separating
hypersurface provides information on pricing under general nonconvexity. The
analysis applies to efficiency assessments, noting that Pareto efficiency can
be expressed as the maximization of aggregate benefit. When nonconvexity
requires a nonlinear separating hypersurface, this implies that nonlinear
pricing becomes an integral part of efficiency analysis. This evaluation
applies to nonmarket goods (e.g., the pricing of carbon emission) as well as
market goods. We show how nonlinear pricing depends on the nature of
nonconvexity. We discuss how associated price discrimination schemes can be
implemented to support efficient allocations.
Keywords:
- Correction
- Source
- Cite
- Save
- Machine Reading By IdeaReader
0
References
0
Citations
NaN
KQI