Supersizing : The Illusion of a Bargain and the Right-to-Split

The supersizing phenomenon where menu prices for large fast food portions appear to be well below their marginal production costs is of considerable scholarly and policy interest. This article examines a monopoly facing demand functions where the single-crossing condition is violated. We find a subset of cases under which a monopolist can separate two different rational consumer types while maximizing and capturing the total surplus associated with marginal-cost pricing. For our subset, the separating equilibrium creates an apparent supersizing discount even though the firm does not actually sell the additional quantity below marginal cost. With public health interest in reducing portion sizes, we introduce the right-to-split as a policy alternative that breaks the separating equilibrium and leads to smaller quantities