Price discrimination
- Read the following Twitter thread (May 2018)
- Instructions: Verify as much of the information in the case as possible
| Group activity: India Worksheet, April 2019 or complete This India Quiz |
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
- Audio: “The death of the single price?” Moneybox
How price discrimination relates to airlines, see:
Also see this video on the concept of bundling:
| Lecture handout: Price discrimination |
| Group activity: Wembley Stadium, July 2012 |
This page ties into Chapter 4 of Economics: A Complete Guide for Business
| 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 |