Price Discrimination

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Written by:

Tina W


Date added:

September 6, 2014








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7 / 1905


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Otherwise, the moment the seller tries to sell the same good at different prices, the buyer at the lower price can arbitrage by selling to the consumer buying at the higher price but with a tiny discount. However, market frictions in oligopolies such as the airlines and even in fully competitive retail or industrial markets allow for a limited degree of differential pricing to different consumers...
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Price discrimination also occurs when it costs more to supply one customer than it does another, and yet the supplier charges both the same price. Although the term "discrimination" has negative (e.g. racist, sexist) connotations in common usage, the meaning of the word "discrimination" (from discriminatio, "a distinction") is neutral...
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