This paper provides a theoretical framework in support of recent empirical findings where the use of open contracts in the form of pay-what-you-like pricing have been found to be viable compared to a fixed price. Our analysis shows that, in spite of the option to free ride, not all consumers...

This article analyzes a commonly used pricing practice, which we call quot;buffet pricing,quot; in which for a fixed entry fee consumers can consume an unlimited quantity during a specified period of time. When consumers are homogeneous in preferences, this form of pricing can be more profitable...