Interesting question,#69627. One I can think of is that at the front entrance of my local Walmart, there are vending machines with 20 Oz bottles of Coca-Cola for $1.25 final price, while if you were to go inside, there are the same exact bottles in little fridges by the checkout counters for $1.58 plus tax. And student software prices were mentioned (though all the ones I've seen lack at least one feature that the full version has; not saying that's always the case, just in every case I've seen). And the senior and military discounts. I wonder what other examples there are.
Maybe cars. Retail, in the United States, is pretty set. No store is going to let you haggle the price of a quart of milk. But with cars haggling is still a reality, and maybe sometimes salesmen let people who couldn't afford an extra couple hundred on the price get it, while they wouldn't let a richer customer who could easily get the extra hundred on the price get it, for the same exact car.
Other Cases of Price Discrimination
Moderator: Marduk
Other Cases of Price Discrimination
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Re: Other Cases of Price Discrimination
No Dice's comment on the question is a very important one. Selling a North Face jacket for $400 compared to an off-brand one for much less is NOT price discrimination. A person is paying for a nice quality jacket or, if you don't think North Face's jackets are actually nicer, for the image of owning a $400 North Face jacket. Huge price differences between roughly similar products is usually an example of product differentiation.
The coke example that you give, Digit, isn't really price discrimination either. The store isn't doing anything to distinguish between its customers based on their price preferences. Indeed, in that example, it might not even be the same seller setting prices. I think Coke Inc. might run the vending machines while Wal-Mart purchases and re-sells the ones in the store. If so, that makes perfect sense because Coke is running on lower costs by just having the vending machine out. Even if it was owned by both, its still not price discrimination. Any person can still go over to the coke machine and buy at the lesser price.
No Dice mentions the best example of price discrimination (the one almost every professor in the Econ department uses) and that's movie ticket discounts for students. Pretty much any "student" or "senior" discount is a form of price discrimination. There's an argument to be made that bulk-packaged products is a form of price discrimination aimed at separating family purchasers (who presumably have children and lower price points) from non-family purchasers, but that gets messy with a bunch of alternative explanations for why it isn't true price discrimination. "Military" discounts are a good one, but I've always thought of those as a way to get good PR rather than just price discrimination. (I'm probably wrong and it's probably solely aimed at PD.)
Some auctions are designed to price discriminate. For example, say a company is going to "go public" and sell shares of its company. It might do a blind auction. The highest bidders receive their shares and so on down until all of the shares are gone.
The coke example that you give, Digit, isn't really price discrimination either. The store isn't doing anything to distinguish between its customers based on their price preferences. Indeed, in that example, it might not even be the same seller setting prices. I think Coke Inc. might run the vending machines while Wal-Mart purchases and re-sells the ones in the store. If so, that makes perfect sense because Coke is running on lower costs by just having the vending machine out. Even if it was owned by both, its still not price discrimination. Any person can still go over to the coke machine and buy at the lesser price.
No Dice mentions the best example of price discrimination (the one almost every professor in the Econ department uses) and that's movie ticket discounts for students. Pretty much any "student" or "senior" discount is a form of price discrimination. There's an argument to be made that bulk-packaged products is a form of price discrimination aimed at separating family purchasers (who presumably have children and lower price points) from non-family purchasers, but that gets messy with a bunch of alternative explanations for why it isn't true price discrimination. "Military" discounts are a good one, but I've always thought of those as a way to get good PR rather than just price discrimination. (I'm probably wrong and it's probably solely aimed at PD.)
Some auctions are designed to price discriminate. For example, say a company is going to "go public" and sell shares of its company. It might do a blind auction. The highest bidders receive their shares and so on down until all of the shares are gone.
Re: Other Cases of Price Discrimination
I've also seen apartment complexes where there are no restrictions saying that people who make more than a certain amount per year can't live there, but people who make more than that threshold have a rent of about $300 more per month than people who make below that amount for the same apartment.
I remember hearing on the news one time that a certain online travel website was observed to serve up more expensive quotes to customers who were connecting via Safari (Apple) browsers. source Of course the more expensive rooms are different. The product that the supposedly more affluent customers are getting served in this case would be the Orbitz results. (e.g., PC user types X, gets result of hotel for $69, Mac user types exact same X, gets result of hotel for $99)
I remember hearing on the news one time that a certain online travel website was observed to serve up more expensive quotes to customers who were connecting via Safari (Apple) browsers. source Of course the more expensive rooms are different. The product that the supposedly more affluent customers are getting served in this case would be the Orbitz results. (e.g., PC user types X, gets result of hotel for $69, Mac user types exact same X, gets result of hotel for $99)
Quod gratis asseritur, gratis negatur.
Re: Other Cases of Price Discrimination
That's for subsidized housing, I assume?Digit wrote:I've also seen apartment complexes where there are no restrictions saying that people who make more than a certain amount per year can't live there, but people who make more than that threshold have a rent of about $300 more per month than people who make below that amount for the same apartment.
At the cafeteria on campus, if you buy food using your student ID, it's cheaper than if you pay with cash or credit card. (I think the difference is that they don't have to charge sales tax, for some reason.) Does that count as price discrimination?
Re: Other Cases of Price Discrimination
Not if the underlying price is the same. The point of price discrimination is to milk consumer surplus. Say I buy a $20 movie off Amazon. Is there a higher price that I would have paid? Sure. Maybe I would have paid $25. But Amazon doesn't know that, and can't collect the extra $5 I willingly would have paid. Say also that there was someone who would have bought the movie for $15, but doesn't, because Amazon set the price at $20. What Amazon really wants to do is set two separate prices: make me pay $25, and the other person $15. Then Amazon sells two movies and makes more profit.
So yeah, if the price of food is actually lower, then it's a good example of price discrimination. But because the sales tax non-students pay goes to the government, and not the cafeteria, the cafeteria isn't actually collecting extra profits if it charges the same price (not including sales tax) on all the food.
In fact, if the final post-tax prices were the same for students and non-students, that would be sort of a wacky reverse price discrimination, where they'd be collecting extra profits on the students' food (a margin equal to the rate of the sales tax). That wouldn't make sense from a business standpoint, though, since presumably students have less money and a lower willingness to pay.
But yeah, anytime the price of something changes based on additional information about the consumer (like whether she is a student), that should be a red flag for price discrimination. It just may not be in the cafeteria case, because of the sales tax issue.
So yeah, if the price of food is actually lower, then it's a good example of price discrimination. But because the sales tax non-students pay goes to the government, and not the cafeteria, the cafeteria isn't actually collecting extra profits if it charges the same price (not including sales tax) on all the food.
In fact, if the final post-tax prices were the same for students and non-students, that would be sort of a wacky reverse price discrimination, where they'd be collecting extra profits on the students' food (a margin equal to the rate of the sales tax). That wouldn't make sense from a business standpoint, though, since presumably students have less money and a lower willingness to pay.
But yeah, anytime the price of something changes based on additional information about the consumer (like whether she is a student), that should be a red flag for price discrimination. It just may not be in the cafeteria case, because of the sales tax issue.
Re: Other Cases of Price Discrimination
I think I read one time an American tourist's account of comparing what he was paying Russian taxicab drivers compared to what locals were paying for the same trip. His was much more.
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Re: Other Cases of Price Discrimination
Now this almost certainly would be an example of ad hoc price discrimination. (A lot like your suggestion of haggling, but more concrete.)Digit wrote:I think I read one time an American tourist's account of comparing what he was paying Russian taxicab drivers compared to what locals were paying for the same trip. His was much more.
It fits in a broader category of geographic price discrimination. Locals are less likely to visit tourism sites nearby so some places will set lower rates for people who live close. For example, Disney Land has special prices not only for California residents, but different rates for different zip codes. http://disneyland.disney.go.com/gate/tickets/zip/
Re: Other Cases of Price Discrimination
There's only one thing that I've learned here.
No Dice is willing to pay $25 for a movie on Amazon? Holy smokes, buddy. I mean, movies are great and stuff, but I can't think of a single movie that I would pay $25 for.
That's all I have to say. Hi guys.
No Dice is willing to pay $25 for a movie on Amazon? Holy smokes, buddy. I mean, movies are great and stuff, but I can't think of a single movie that I would pay $25 for.
That's all I have to say. Hi guys.