Rather than an elasticity explanation I would suggest a two part
tarriff.  The initial charge grabs the consumer surplus, MC is close to
zero for soft drinks (mostly water) so p=MC is optimal.  Fabio's real
question, however, is why do some restaurants choose one policy and
others another.  This is hard to say.  Two part tarrifs work well when
customer demands are similar.  Thus, restaurants which serve a
specialized clientiele, serve only one type of meal etc. should offer
free refills.  Can this help to explain a related puzzle?  Although we
often think of free refills at all you can eat or family type
restaurants, just about every *fine* dining establishment I know offers
free refills on coffee, while McDonalds and Burger King don't offer free
refills on anything.


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