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Price Discrimination
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Price Discrimination
Pricing strategy of price discrimination is the strategy in which sellers charge different prices to the customers for the same product. In addition, within pure discrimination sellers sell goods on the maximum prices that the consumers are willing to pay. The main purpose of price discrimination is to increase the profit. Sellers try to obtain a consumer surplus of the market to maximize the revenue. One of the major reason behind the price discrimination is the unawareness of the consumer regarding the market price. Consumer reacts to the price asked by the sellers without knowing the actual price of the particular product ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"7tXpFPfm","properties":{"formattedCitation":"(Armstrong & Vickers, 1993)","plainCitation":"(Armstrong & Vickers, 1993)","noteIndex":0},"citationItems":[{"id":1683,"uris":["http://zotero.org/users/local/mlRB1JqV/items/2QBJPR57"],"uri":["http://zotero.org/users/local/mlRB1JqV/items/2QBJPR57"],"itemData":{"id":1683,"type":"article-journal","title":"Price Discrimination, Competition and Regulation","container-title":"The Journal of Industrial Economics","page":"335-359","volume":"41","issue":"4","source":"JSTOR","archive":"JSTOR","abstract":"The paper analyzes some effects of price discrimination policy in a model where a dominant incumbent firm faces an endogenous degree of competition in one of its two markets. Banning price discrimination tends to encourage more entry, which is desirable if the entrant is as efficient as the incumbent but has ambiguous welfare effects more generally. Prices in both markets might fall. Price discrimination policy under different forms of price regulation is also examined. If the incumbent's average price level is regulated, then allowing price discrimination can lead to pricing below marginal cost, with possible anti-competitive consequences.","DOI":"10.2307/2950596","ISSN":"0022-1821","author":[{"family":"Armstrong","given":"Mark"},{"family":"Vickers","given":"John"}],"issued":{"date-parts":[["1993"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Armstrong & Vickers, 1993).
Movie theaters, airlines, and various other companies charge different prices based on age, day, and purchase date that is the example of price discrimination. For instance, the theaters offer a discount at day time while charge full price at night. This is because during day time customers are less willing to visit such places while they have to pay full price at night when they can visit the theater. Same in the case of airlines, the price for booking a ticket week before the flight is less than the price they charge on the last day. These businesses use the need and willingness of the consumers to increase the revenue ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"XbRSfKWw","properties":{"formattedCitation":"(\\uc0\\u8220{}Airline price discrimination | Economics Help,\\uc0\\u8221{} n.d.)","plainCitation":"(“Airline price discrimination | Economics Help,” n.d.)","noteIndex":0},"citationItems":[{"id":1684,"uris":["http://zotero.org/users/local/mlRB1JqV/items/K6WYDRNX"],"uri":["http://zotero.org/users/local/mlRB1JqV/items/K6WYDRNX"],"itemData":{"id":1684,"type":"webpage","title":"Airline price discrimination | Economics Help","URL":"https://www.economicshelp.org/blog/7767/business/airline-price-discrimination/","accessed":{"date-parts":[["2019",11,16]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (“Airline price discrimination | Economics Help,” n.d.).
Price discrimination for the selling of petrol is unfair. Petrol is good that controls various other things of the daily schedule, therefore, fluctuation in the petrol price affects the customers. For instance, petrol stations announce for cut-price fuel but they do not provide exact date or time for the cut-price. It results in the purchasing of petrol only by the customers with most price elasticity while remaining become unable to purchase petrol on decided days or time. They ignore the cut-price date and purchase only when they find purchasing the most convenient ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"wPBeJyoK","properties":{"formattedCitation":"(\\uc0\\u8220{}Examples of Price Discrimination | Economics Help,\\uc0\\u8221{} n.d.)","plainCitation":"(“Examples of Price Discrimination | Economics Help,” n.d.)","noteIndex":0},"citationItems":[{"id":1685,"uris":["http://zotero.org/users/local/mlRB1JqV/items/EBQK2KHV"],"uri":["http://zotero.org/users/local/mlRB1JqV/items/EBQK2KHV"],"itemData":{"id":1685,"type":"webpage","title":"Examples of Price Discrimination | Economics Help","URL":"https://www.economicshelp.org/blog/7042/economics/examples-of-price-discrimination/","accessed":{"date-parts":[["2019",11,16]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (“Examples of Price Discrimination | Economics Help,” n.d.).
References
ADDIN ZOTERO_BIBL {"uncited":[],"omitted":[],"custom":[]} CSL_BIBLIOGRAPHY Airline price discrimination | Economics Help. (n.d.). Retrieved November 16, 2019, from https://www.economicshelp.org/blog/7767/business/airline-price-discrimination/
Armstrong, M., & Vickers, J. (1993). Price Discrimination, Competition and Regulation. The Journal of Industrial Economics, 41(4), 335–359. https://doi.org/10.2307/2950596
Examples of Price Discrimination | Economics Help. (n.d.). Retrieved November 16, 2019, from https://www.economicshelp.org/blog/7042/economics/examples-of-price-discrimination/
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