What is price discrimination?(pls give me like real life examples)
In: Economics
Airfare pricing is an example of this. There are business travelers and leisure travelers. The business travelers aren’t very sensitive to price, as the company is paying for the flight. Leisure travelers are sensitive to price. If you drop your fares for business travelers, you still get about the same number of them, but you make less money on them. If you drop your fares for leisure travelers, you will get more of them, and you might be able to make more money. You want to be able to discriminate between the business and leisure travelers, and offer discounts for the leisure travelers and not the business travelers. You can do this by charging less to book a flight several weeks before you go than you do to book a flight shortly before you leave. You can charge more for the flexibility to change your flight or get a refund. You can charge less for round trip flights where the traveler spends at least one weekend day at their destination.
Latest Answers