1. If you sell a good where you can not sell different qualities at all, customers get angry. This happened on the internet for example, when there is geo-targeting and other things.
2. In most cases, customers do not notice non-linear pricing. Bonuses, packages, bundles, feature choices, customize, build-your-own, editions, - all just names for nonlinear pricing schemes.
3. You do not actually get to extract all surplus. You have to pay an information rent to the consumer, which comes from not actually knowing his reservation price. If you set only one price, then it depends on many fundamentals who gets how much. With nonlinear pricing, you can approximate the actual demand better by making consumers choose their own poison. But it is still a "second best".
4. "Perfect" markets in any case guarantee only efficiency in terms of allocation. Fairness and distribution are another matter entirely.
A market in which I, the monopolist, use a two-part price to extract 100% of the consumer surplus is in fact welfare maximizing. All surplus is there, and the company is owned by someone. Classical free market econ theory literally does not concern itself with how the ownership is distributed.
That's why we need taxes and redistribution.
Edit: to be fair to econ, the classical should really be underlined thrice
I don't understand how a trade with no consumer surplus benefits a consumer. If it benefits the consumer, then they would be willing to pay some of the value of the benefit and hence their surplus value is not zero, which is a contradiction. If it does not benefit the consumer, they will not make the trade.
You get some surplus, because it is not possible to write a non-linear pricing scheme that extracts everything from all customers.
That is basically, depending on your willingness to pay, you may get a pretty good deal.
The underlying reason for this is that the producer basically has to pay you a bit of surplus to reveal your willingness to pay.
Not sure... transactions costs could be defined as costs that need to be payed by either side to complete the transaction.
In this case, we are talking about a shift of surplus towards the consumer.
If you have a high willingness to pay, it is beneficial for you to signal that your willingness to pay is actually low. If there was only one price, this would incentivize the firm to give you (and everyone else) a lower price.
Instead, to get you to pay more, the contract proposed to you must be relatively more beneficial to you than just choosing a simpler service plan or a lower value good and bagging the surplus for later. This "relative benefit" is the information rent you will earn.
1. If you sell a good where you can not sell different qualities at all, customers get angry. This happened on the internet for example, when there is geo-targeting and other things.
2. In most cases, customers do not notice non-linear pricing. Bonuses, packages, bundles, feature choices, customize, build-your-own, editions, - all just names for nonlinear pricing schemes.
3. You do not actually get to extract all surplus. You have to pay an information rent to the consumer, which comes from not actually knowing his reservation price. If you set only one price, then it depends on many fundamentals who gets how much. With nonlinear pricing, you can approximate the actual demand better by making consumers choose their own poison. But it is still a "second best".
4. "Perfect" markets in any case guarantee only efficiency in terms of allocation. Fairness and distribution are another matter entirely. A market in which I, the monopolist, use a two-part price to extract 100% of the consumer surplus is in fact welfare maximizing. All surplus is there, and the company is owned by someone. Classical free market econ theory literally does not concern itself with how the ownership is distributed. That's why we need taxes and redistribution.
Edit: to be fair to econ, the classical should really be underlined thrice