Ramsey pricing is a pricing strategy used by monopolies or public utilities to set prices for their services. It aims to cover costs while minimizing the economic impact on consumers. The idea is to charge higher prices to those who are less sensitive to price changes and lower prices to those who are more sensitive, ensuring that the overall demand is met without significant loss of customers. This approach helps balance the need for revenue with the goal of maintaining access to essential services. By doing so, Ramsey pricing promotes efficiency and fairness, allowing providers to sustain operations while catering to diverse consumer needs.