When a firm sells a product together with another product, it may rely on a twopart tariff. I explain that when a firm uses a two-part tariff, a cost increase may or may not be passed through to final consumers. Depending on the characteristics of final consumers� demand, a cost increase could result in no increase in the price of either product, an increase in the price of both produc…

When a firm sells a product together with another product, it may rely on a twopart tariff. I explain that when a firm uses a two-part tariff, a cost increase may or may not be passed through to final consumers. Depending on the characteristics of final consumers� demand, a cost increase could result in no increase in the price of either product, an increase in the price of both products, …