The Price Of Price Discrimination - 851 Words

price discrimination is selling the same product to different consumers at different prices, for reasons other than cost. For every goods and services, some consumers are willing to pay more than others, therefore firms that use price discrimination strategy charge different prices in different markets where there are different PED’s. If the product is slightly different it may be product, not price discrimination. The aim of price discrimination is to convert consumer surplus into producer surplus. However, there are some conditions for firms to be able to price discriminate. Firstly, the firm must have price setting power and a degree of monopoly power. If they don’t have market power than they wont be able to charge consumer more than the competitive price. Secondly, the firm must be able to clearly identify sub-markets that have different elasticities of demand. By knowing that firms can raise price to those consumers that have inelastic demand and lower the price for those who have elastic demand to increase firm’s revenue. And lastly, these sub markets must be able to kept separate at minimal cost, with little ability for consumers to seep from the more expensive to the cheaper market. There need to be minimal arbitrage or resell, if people can buy the product in a low price sub-market and then re-sell it in a higher priced sub market, price discrimination will not be completely effective. There are three main strategy of price discrimination. First degree priceShow MoreRelatedPrice Discrimination1560 Words   |  7 PagesPRICE DISCRIMINATION What is Price Discrimination; Price discrimination is a pricing tactic that charges consumers different prices for the same product or service. In other worlds, price discrimination exists, when identical product or service transacted at different prices from the same supplier. Price discrimination allows a company to earn higher profits than standard pricing because it allows firms to capture every last pence of revenue available from each of its customers. While perfectRead MorePrice Discrimination711 Words   |  3 PagesPricing Discrimination by Amazon.com The Internet allows shoppers to easily compare prices across thousands of stores. But it also enables businesses to collect detailed information about a customers purchasing history, preferences, and financial resources and to set prices accordingly. So when you buy an airplane ticket or a DVD online, you may pay a higher or lower price than another customer buying the very same item from the very same site. In September 2000, Amazon.com reportedly outragedRead MorePrice Discrimination8877 Words   |  36 PagesR. Preston McAfee, Price Discrimination, in 1 ISSUES IN COMPETITION LAW AND POLICY 465 (ABA Section of Antitrust Law 2008) Chapter 20 _________________________ PRICE DISCRIMINATION R. 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Then, is there a difference between priceRead MoreEssay on Price Discrimination1602 Words   |  7 PagesPrice Discrimination Prices are based upon the price elasticity of demand in each given market. In other terms, this means that during ladies night at the local bar, it costs more for men to have a beer than women simply because these bars find it o.k. to charge females less, as a way to draw more females to the business on a specific night. Price discrimination is part of the commercial and business world. Movie theaters, magazines, computer software companies, and thousands of otherRead MoreThe Price Discrimination Of Amazon1303 Words   |  6 Pagesretailer, like Amazon, can price discriminate to maximise its profits. This pricing policy is used because ‘some customers will value your product or service while others will value it less’ (Smith, 2004). Price discrimination is where a firm sells the same product at different prices to different consumers. My job, as a high powered consultant, is to analyse and discuss the possible benefits and costs of using price discrimination in Amazon. II. Degrees of price discrimination Amazon can apply one threeRead MoreWhat Is Price Discrimination?1337 Words   |  6 PagesWhat is price discrimination? For first time readers one would think price discrimination is race, sex, and class issue but incredibility it has nothing to do with that. This chapter discusses the concept of price discrimination. What is price discrimination? It â€Å"is defined as the existence of price difference across customers for the same good that are not due to differences in the marginal costs of supplying the customers.†( North and Miller, 1971, p.122). Price discrimination arises when marginalRead MorePrice Discrimination in Health Care2246 Words   |  9 PagesPrice Discrimination in Health Care Table of Contents Abstract 3 Price discrimination 4 The uninsured or self-pay patient 5 Price discrimination in health care 6 Cost shifting 8 Recommendations 9 Abstract The price of health care can vary dramatically depending on insurance coverage, and whether the care received was in network, out of network, government funded, orRead MoreBasic Types Of Price Discrimination1740 Words   |  7 PagesPrice discrimination is defined as charging customers a different price for the same product. One major factor of price discrimination is elasticity of demand. Elasticity of demand measures the percentage of change in quantity to percentage of change in price. If the percent of change is greater than one, it is elastic. On the other hand, if the percentage of change is less than one, it is inelastic. For customers who are not price sensitive, or the demand is elastic, when using price discriminationRead MoreWhat is Price Discrimination? Essay1359 Words   |  6 PagesPrice Discrimination Price discrimination is charging consumers with different prices for identical similar products, which are not related to costs of production. An important point to mention, Products that varies in prices due to cost variation and justification are not considered as price discrimination. For example, charging different prices for the same product for different geographical locations does not result into price discrimination, because of the transportation or delivering cost differential