Price discrimination

Activity: Read the following Twitter thread (also available here).

Activity: Complete the India Worksheet, April 2019 or complete This India Quiz
Lecture handout: India DB*

Textbook Reading: Chapter 4 (Section 4.3; pp. 112-122) and Chapter 12 (Section 12.4; pp. 434-437)

The main concepts from this session – elasticity and price discrimination – lend themselves beautifully to practical implications. A nice application is an identification of the price, income, and cross price elasticities of various products. That said, I think it’s easy to misuse these concepts. Cross price elasticity is in part captured already in price elasticity (since a chief determinant of price elasticity is the availability of substitutes) and there can be an unfortunate tendency to use income elasticity labels inappropriately. I do not believe in any inherent distinction between “necessities” and “luxuries” – as Mary Douglas said, “there will always be luxuries, for rank must be marked” 1979 [1996] p.85). Income elasticities are better assigned to social groups, rather than the goods themselves.

For a 30 point quiz see ‘Elasticity Assignment

The following is a great resource on price discrimination

How price discrimination relates to airlines, see:

Also see this video on the concept of bundling:

Group activity: Wembley Stadium, July 2012
Learning Objectives: Understand different techniques for price differentiation. See the relationship between revenue and elasticity

Cutting edge theory: The case includes a discussion of PWYW pricing models

Focus on diversity: The case is set in India