113
you are viewing a single comment's thread
view the rest of the comments
[-] tal@lemmy.today 2 points 11 months ago

https://en.wikipedia.org/wiki/Price_discrimination

Price discrimination is a microeconomic pricing strategy where identical or largely similar goods or services are sold at different prices by the same provider in different market segments.[1][2][3] Price discrimination is distinguished from product differentiation by the more substantial difference in production cost for the differently priced products involved in the latter strategy.[3] Price differentiation essentially relies on the variation in the customers' willingness to pay[2][3][4] and in the elasticity of their demand. For price discrimination to succeed, a firm must have market power, such as a dominant market share, product uniqueness, sole pricing power, etc.[5] All prices under price discrimination are higher than the equilibrium price in a perfectly competitive market. However, some prices under price discrimination may be lower than the price charged by a single-price monopolist. Price discrimination is utilised by the monopolist to recapture some deadweight loss.[6] This Pricing strategy enables firms to capture additional consumer surplus and maximize their profits while benefiting some consumers at lower prices. Price discrimination can take many forms and is prevalent in many industries, from education and telecommunications to healthcare.[7]

In a theoretical market with perfect information, perfect substitutes, and no transaction costs or prohibition on secondary exchange (or re-selling) to prevent arbitrage, price discrimination can only be a feature of monopoly and oligopoly markets,[19] where market power can be exercised (see 'Price discrimination and monopoly power' below for more in-depth explanation). Without market power when the price is differentiated higher than the market equilibrium consumers will move to buy from other producers selling at the market equilibrium.[20] Moreover, when the seller tries to sell the same good at differentiating prices, the buyer at the lower price can arbitrage by selling to the consumer buying at the higher price with a small discount from the higher price.[21]

You're undermining their reliance on consumers not having perfect information there.

this post was submitted on 18 Dec 2023
113 points (100.0% liked)

Ask Lemmy

26858 readers
1462 users here now

A Fediverse community for open-ended, thought provoking questions

Please don't post about US Politics. If you need to do this, try !politicaldiscussion@lemmy.world


Rules: (interactive)


1) Be nice and; have funDoxxing, trolling, sealioning, racism, and toxicity are not welcomed in AskLemmy. Remember what your mother said: if you can't say something nice, don't say anything at all. In addition, the site-wide Lemmy.world terms of service also apply here. Please familiarize yourself with them


2) All posts must end with a '?'This is sort of like Jeopardy. Please phrase all post titles in the form of a proper question ending with ?


3) No spamPlease do not flood the community with nonsense. Actual suspected spammers will be banned on site. No astroturfing.


4) NSFW is okay, within reasonJust remember to tag posts with either a content warning or a [NSFW] tag. Overtly sexual posts are not allowed, please direct them to either !asklemmyafterdark@lemmy.world or !asklemmynsfw@lemmynsfw.com. NSFW comments should be restricted to posts tagged [NSFW].


5) This is not a support community.
It is not a place for 'how do I?', type questions. If you have any questions regarding the site itself or would like to report a community, please direct them to Lemmy.world Support or email info@lemmy.world. For other questions check our partnered communities list, or use the search function.


Reminder: The terms of service apply here too.

Partnered Communities:

Tech Support

No Stupid Questions

You Should Know

Reddit

Jokes

Ask Ouija


Logo design credit goes to: tubbadu


founded 1 year ago
MODERATORS