A study on two-part pricing under the flexibility of consumption

We point out that the hypothesis of consumer's short-term rationality in many literatures may leads to a misunderstanding of the equilibrium under two-part pricing. When consumers have the flexibility of future consumption, their participation constraints are different from the classical ones. This results in a different equilibrium although our model keeps the hypothesis of profit maximization that entitles us to compare with the classical theory. The marginal price changes with the change of parameters that influence consumers' decision, and the fixed fee changes correspondently. Finally, we prove that the fixed fee can automatically realize the incentive compatible constraint.