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Price Discrimination: Common or Illegal? Is price discrimination common practice
or illegal? ... Price discrimination is part of the commercial and business world. ...
Price Discrimination. ... In other worlds, price discrimination exists, when identical
product or service transacted at different prices from the same supplier. ...
price discrimination. ... Types of Price Discrimination Price discrimination is the ability
of a firm to charge different prices to different consumers. ...
Second Degree Price Discrimination. ... In order discriminate, Aramco knows the three
conditions of this particular price discrimination are satisfied. ...
... This charging of different prices for a particular good is known as Price
Discrimination (Britton, 2003) and is very common in various monopolistic markets. ...
Submitted by cemmeh on May 11, 2008
Category: Business
Words: 1527 | Pages: 7
Views: 100
Popularity Rank: 94,823
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PRICE 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 perfect price discrimination is illegal, when the optimal price is set for every customer, imperfect price discrimination exists. For example, bus companies usually charge four different prices for a ride. The prices target various age groups, including youth, students, adults and seniors. The prices fluctuate with the expected income of each age bracket, with the highest charge goes to the adult population.
A much less obvious form of price discrimination is that of periodic sales in stores, which serve to discriminate between informed and patient buyers and the rest. Price-matching offers (in which a store promises to match any competitor's price) also play a similar role.
It must be remembered that the main aim of price discrimination is to increase the total revenue and hopefully the profits of the supplier.
Conditions for Price Discrimination;
The opportunity to engage in price discrimination is not readily available to all sellers. This is why all companies can not practise price discrimination. In fact, it will only be possible if all three of the following circumstances apply.
1. The firm must operate in imperfect competition and a firm must have an element of monopoly power; The Seller must be a monopolist or at least, must possess some degree of monopoly power that is, ability to control output and price. The firm in perfect competition can not...
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