Theoretical Analysis of the Relationship Between Monopoly's Optimal Tariffs and Consumer Utility

Theoretical Analysis of the Relationship Between Monopoly's Optimal Tariffs and Consumer Utility

Bouchrika Ali, Chokri Terzi, Khalil Mhadhbi, Issaoui Fakhri
Copyright: © 2019 |Pages: 13
DOI: 10.4018/IJSEM.2019010104
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Abstract

The article is an extension to the pricing models proposed by Jean Tirol that model the consumption of an environmental good. However, the different consumption patterns of this good, which is characterized by a taste parameter (two tastes or a continuum of taste); always verifying an imbalance between the profit of the monopoly (mainly natural); and the utility function of the consumer agent. Taxation on the price, in relation to consumer preferences, can ensure the objectives of an efficient management of a good which has variations in its physical nature. Moreover, a coefficient of variation in its nature, based on a scale of measurement, can achieve the convergence between economic and social objectives. The underlying results show that the consumer surplus is proportional to the variation between the average and marginal utility. In addition, maximizing monopoly profit provides a reasonable price that ensures social equity measures between the different users.
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Pricing Of The Monopoly

In the case where the economy is dependent on the services delivered by a natural monopoly, the question of the regulation of this monopoly arises and this for any mode of management and governance. The answers provided by economic theory are not always satisfactory because of the difficulty of implementing a perfect regulating system of the produced good.

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