Journal of Regulatory Economics

, Volume 6, Issue 3, pp 247–264 | Cite as

Self-selecting tariffs under pure preferences among tariffs

  • Kenneth E. Train


The behavioral assumptions for welfare analysis of self-selecting tariffs are generalized to be consistent with those maintained in empirical models of tariff choice. When customers have pure preferences among tariffs, it is shown that the optimal self-selecting tariffs provide strictly greater welfare than mandatory marginal cost prices, contain marginal prices that do not equal marginal cost, and can Pareto dominate an existing tariff. As an illustration of the theoretical results, optimal self-selecting tariffs are calculated empirically for a local telephone company.


Theoretical Result Marginal Cost Empirical Model Public Finance Industrial Organization 
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Copyright information

© Kluwer Academic Publishers 1994

Authors and Affiliations

  • Kenneth E. Train
    • 1
  1. 1.Department of EconomicsUniversity of California at BerkeleyBerkeley

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