Pricing Beach Access
We’re on our beach week in Stone Harbor, NJ.? The town enforces tag-wearing on its wonderful beaches.? It’s $25 for a tag for the whole season, $12 for one week, $6 for one day.
Assume the decision-makers, who are presumably agents of the town’s homeowners, set the season tag price to satisfy their principals.? Many visitors stay for 2 weeks, and they probably buy the season tag (paying $1 more than needed, but saving the hassle of a second purchase).? One-week visitors will buy the weekly tag, as will weekend visitors. Day-trippers will buy the $6 tag. The pricing structure strikes me as almost perfect for extracting the maximum?consumer surplus.? Given the constraint on the seasonal tags, the only way to extract more surplus would be to charge something like $9 for one day, and $18 for one week. Could they do any better without scaring away beach-goers? (Related: exploiting the permit system at campgrounds.)