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Surplus flat files used12/26/2023 The second condition that needs to be satisfied for a two-part tariff to be sustainable is that the producer looking to implement such a policy have market power. It's pretty clear that a two-part tariff would be infeasible in a competitive market since producers in such markets are price takers and therefore don't have the flexibility to innovate with respect to their pricing policies. On the other end of the spectrum, it's also easy to see that a monopolist should be able to implement a two-part tariff (assuming access control of course) since it would be the only seller of the product. That said, it could be possible to maintain a two-part tariff in imperfectly competitive markets, especially if competitors are utilizing similar pricing policies. In order for a two-part tariff to be logistically feasible in a market, a few conditions have to be satisfied. Most importantly, a producer looking to implement a two-part tariff must control access to the product- in other words, the product must not be available to purchase without paying the entry fee. This makes sense since without access control a single consumer could go buy a bunch of units of the product and then put them up for sale to customers who didn't pay the original entry fee. Therefore, a closely-related necessary condition is that resale markets for the product do not exist.
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