What is price discrimination?(pls give me like real life examples)
In: Economics
It’s very simple:
Let’s say you have two people, Bob and Frank. Bob would be willing to pay $10 for your product. Frank would be willing to pay $20. Ideally, you’d like to sell your product to Bob for $10 and to Frank for $20, since that gets you more money.
But Frank isn’t just going to tell you that he’d pay $20 if he knows that you just sold it to Bob for $10. He might be willing to bay $20, but he’s still rather only pay $10.
Price discrimination is any scheme that allows you to separate Bob and Frank and charge them different prices.
Examples:
-Selling a video game for $60 at launch, then cutting the price to $30 a year later (Even if Frank knows you’ll be doing this, he might still want the game right away).
-Having slightly different models of the same product (Frank is willing to pay $90 for the collector’s edition).
-Charging different prices in different countries/stores (Frank lives in the high-income part of down, and isn’t going to drive to the slums for a $5 discount).
-Selling the exact same product with different brand labels (Frank is willing to pay $10 more for a logo that shows people that he had an extra $10 to spend).
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