Price discrimination and the basis of price discrimination

Low price is charged where demand is more elastic and high price in the market with the less elastic demand. In these kinds of markets the firm has to decrease price in order to sell more of the good because they are the only supplier.

There are sometimes group discounts on rail tickets and passes. Then there is the ordinary bikes of four, three, two and one cylinder engines. Types Price discrimination has following types: The individual seller is able to divide and keep his market into separate parts only if it is imperfect.

What can I do? Geographical distance involving high cost of transportation i. What are the various types of database users?

Price Discrimination – Meaning, Types, Conditions and Other Information | Economics

The first allows an online provider to adjust pricing according to what he thinks you will pay, while the second reflects an attempt to attract families to a restaurant.

Customers typically appreciate these opportunities as long as the rewards are obtainable and they do not accompany price increases to compensate, according to a study by Sarah Spiekermann at the Institute of Information Systems, Humboldt University Berlin.

When is price discrimination possible and profitable? Buying in bulk wholesale warehouses like Costcoairlines selling off last-minute seats that have not been bought for a lower price, etc. Normally, the sales must be "in" interstate commerce that is, the sale must be across a state line.

Markets must be kept separate by time, physical distance and nature of use. In Europe, motor insurance premiums have historically been higher for men than for women, a practice that the insurance industry attempts to justify on the basis of different levels of risk.

The lowest rate charged is M3P3 for M2 to M3 units. Secondly, price discrimination may be based on the nature of the product. Discrimination is essentially being prejudiced against due to some physical characteristic that differentiates you, or a personal belief or lifestyle.

Each of these groups typically have a much different demand curve. Profit maximizing output is much larger than the quantity demand in a single market or section of consumers.

Finding this information could be very costly to obtain, or could be realistically impossible to obtain. Similar techniques are used in pricing business class airline tickets and premium alcoholic drinks, for example. Understanding the 3 Types of Price Discrimination With Examples Ever wondered why the storekeeper, sometimes, offers heavy discounts or charges different prices for different customers?

Price discrimination refers to when the same product is sold for different prices, no associated with changes in cost. In this situation, total revenue will remain the same whatever shifting of output may be done from one market to the other by the monopolist.

In addition to increased sales to the target group, businesses benefit from the resulting positive publicity, leading to increased sales to the general public. Such discrimination is only possible if the demand of each consumer below a certain maximum price is perfectly inelastic.

Price discrimination allows a seller to divide consumers on the basis of their price elasticity of demand. The second degree price discrimination is practised by telephone companies, railways, companies supplying water, electricity and gas in developed countries where these services are available in plenty.

What is discrimination?

A doctor having a monopoly position in a particular locality can charge rich patients high fee but poor patients low fee, for his services rendered.Price Gender Discrimination Gender-Based Pricing is a Form of Discrimination Charging more for products or services on the basis of a buyer's gender is against the law in Miami-Dade.

Price discrimination is of many types: Firstly, it may be personal based on the income of the customer. For example, doctors and law­yers charge different fees from different customers on the basis of their incomes.

Price discrimination occurs when producers charges different prices to different people for reasons not related to cost. There are generally 3 types. 1st degree price discrimination -. Price discrimination refers to when the same product is sold for different prices, no associated with changes in cost.

There are three types of price discrimination. 1st degree: Different prices. Jun 27,  · Price discrimination involves selling the same product for different prices to different customers, and there are a few types. However, many are of the opinion that such kind of price discrimination on the basis of gender is biased and sexist in nature.

★ Example: Discrimination on the basis of occupation. ♦ Canteen concessions to staff, free parking facilities, etc.

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Price discrimination and the basis of price discrimination
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