Optimal Departures from Marginal Cost Pricing

The need for this paper is a paradox in itself and indeed it might be subtitled: The Purloined Proposition or The Mystery of the Mislaid Maxim. For the results which it describes have appeared many times in the literature and have been reported by most eminent economists in very prominent journals. Yet these results may well come as a surprise to many readers who will consider them to be at variance with ideas which they have long accepted.