Competition and evolution of linear and two-part tariff

The duopoly competition model presented in this paper tries to explain why a two-part tariff exists in the telecommunication industry. The investigation of competition and evolution between linear and two-part tariffs shows how the growth of the market and the sequence of action may affect equilibrium. The two pricing patterns are assumed to be virtual participants to constitute a tariff competition and evolution model, and by calculation, we can obtain metaphase equilibrium and evolution equilibrium. The conclusion shows that optimized Pareto equilibrium should be carried out by combining linear pricing and buffet pricing, this case being presented as a three-part tariff when many sub-markets coexist.